Producer inflation moved higher in February, but the outcome was higher than was generally anticipated. The producer price index (PPI) increased by 1.3% after an increase of 1.0% in January.
Producer inflation rose to 11.2% compared to 10.4% in January. While the outcome was clearly higher than expected, Adenaan Hardien, chief economist at Cadiz African Harvest Asset Management, maintains that care should be taken when interpreting these numbers.
The current measure of producer inflation was introduced a month earlier and it is substantially different to the old measure. And teething problems remain.
Having said this, the figures do show that factory gate prices remain under pressure, which is a worry for consumer prices. This is not good news for interest rates, especially given that the next rate decision is a very close call.