No surprise

(29.8.04) Slight increase in producer inflation unsurprising.

There was a marginal increase in the June PPI to 1.3% from May's 1.2%.

Unsurprisingly, this was due to electricity price adjustments and the impact of supply shock from higher oil prices, Tebogo Hlabioa, economic research analyst at Metropolitan Asset Managers, said.

"The strong Rand helped to offset the full impact of rising oil prices as witnessed by the decline in imported PPI from 2.7% in May to 4.1% in June, while domestic activity, boosted by lower interest rates, put upward pressure on domestic PPI increasing from 2.5% in May to 3.3% in June.

Since producers' power to shift higher production costs to consumers remains muted, inflation expectations should remain low going forward.

We remain confident that the South African Reserve Bank will not increase interest rates at the next Monetary Policy Committee meeting," she said.

There was a marginal increase in the June PPI to 1.3% from May's 1.2%.

Unsurprisingly, this was due to electricity price adjustments and the impact of supply shock from higher oil prices, Tebogo Hlabioa, economic research analyst at Metropolitan Asset Managers, said.

"The strong Rand helped to offset the full impact of rising oil prices as witnessed by the decline in imported PPI from 2.7% in May to 4.1% in June, while domestic activity, boosted by lower interest rates, put upward pressure on domestic PPI increasing from 2.5% in May to 3.3% in June.

Since producers' power to shift higher production costs to consumers remains muted, inflation expectations should remain low going forward.

We remain confident that the South African Reserve Bank will not increase interest rates at the next Monetary Policy Committee meeting," she said.