Bank rate hike still likely to happen

JOHANNESBURG – South Africa’s producer price inflation slowed to 10,4 per cent year-on-year in June, official data showed yesterday, but a jump in the monthly rate continued to stoke expectations of higher interest rates.

Statistics South Africa said June producer price inflation slowed from an annual 11,3 per cent in May but increased by 2,1 per cent on a month-on-month basis, compared to a 1,1 per cent rise the month before. Economists polled by Reuters had forecast that annual PPI would come in at 10,4 per cent.The rand was little changed at 6,9260 against the US dollar, from 6,9215 before the data came out.The central bank lifted its repo rate by 50 basis points to 9,5 per cent last month, adding to 200 basis points worth of increases between June and December last year, in a bid to rein in inflationary consumer demand, most of it credit-driven.Producer inflation has continued to outstrip consumer inflation and is bound to keep pressure on rising CPIX inflation.The targeted CPIX rate increased by a steady 6,4 per cent year-on-year in June, staying above the central bank’s three-six per cent target for the third month in a row.Reserve Bank Governor Tito Mboweni has said there is a strong upward bias in inflation beyond high food and fuel prices and that the country may have re-entered an interest rate tightening phase.Nampa-ReutersEconomists polled by Reuters had forecast that annual PPI would come in at 10,4 per cent.The rand was little changed at 6,9260 against the US dollar, from 6,9215 before the data came out.The central bank lifted its repo rate by 50 basis points to 9,5 per cent last month, adding to 200 basis points worth of increases between June and December last year, in a bid to rein in inflationary consumer demand, most of it credit-driven.Producer inflation has continued to outstrip consumer inflation and is bound to keep pressure on rising CPIX inflation.The targeted CPIX rate increased by a steady 6,4 per cent year-on-year in June, staying above the central bank’s three-six per cent target for the third month in a row.Reserve Bank Governor Tito Mboweni has said there is a strong upward bias in inflation beyond high food and fuel prices and that the country may have re-entered an interest rate tightening phase.Nampa-Reuters