Producer Price Index remains unchanged, but an increase is coming
Producer Price Index (PPI) in April remains unchanged at 0.5% from March 2025.
PPI measures the average change in prices of goods and services produced by manufacturers and producers.
It tracks inflation at the production level, showing how costs are changing for goods before they reach consumers.
Statistics South Africa (Stats SA) released the Index on Thursday, showing PPI increased by 0.5% month-on-month. However, economists believe that producer inflation is likely to rise moderately in the coming months.
Professor Waldo Krugell, an economist at the Faculty of Economic and Management Sciences at the North-West University (NWU), this week told The Citizen the annual 0.5% PPI is very low. However, the month-to-month is on the high side.
ALSO READ: Small fuel price decrease no help for consumers in looming rough ride
Positive contributor in the PPI
Stats SA stated that the main positive contributors to the headline PPI annual and monthly inflation rate were food products, beverages, and tobacco products. Annually, the products increased by 4.7%, contributing 1.4%, while monthly, they increased by 0.9%, contributing 0.3%.
The index shows that the annual percentage change in the PPI for intermediate manufactured goods was 8.5% in April 2025, compared with 7.4% in March 2025.
The index increased by 2.4% month-on-month. The main contributors to the annual rate were basic and fabricated metals and chemicals, as well as rubber and plastic products. The products increased by 4.2%, contributing 1.2%.
How does the PPI affect consumers?
If producers face higher costs, these costs might be passed on to consumers through higher prices on goods and services. Increasing PPI can also mean an increase in future for consumer prices.
Nedbank economists predict PPI will moderately increase in the coming months.
'The low base established in the second half of last year will amplify the upward trend, particularly on food. Local food prices will also be affected by higher global food prices, a weaker rand and potential disruptions to global supply chains due to the unfolding trade war.'
ALSO READ: Godongwana cuts zero-rated food basket in Budget 3.0
Electricity and water
The statistics show that the annual percentage change in the PPI for electricity and water was 11.2% in April 2025, compared with 10.0% in March 2025.
'The index increased by 6.4% month-on-month. The contributors to the annual and monthly rates were electricity and water.'
Greater concern for food
Nedbank also said the outbreak of animal diseases is a concern for livestock.
Economists expect global oil prices to remain relatively subdued in 2025, owing to balanced supply and demand dynamics.
Beyond food and fuel, upward pressure will also come from steep electricity tariffs. Renewed rand weakness poses the most significant upside risks to the outlook.
'The rand remains vulnerable to fragile global risk sentiment, which could shift dramatically in response to any escalation in the global trade war, changes in US monetary policy, or a prolonged period of acute policy and geopolitical uncertainty.'
'Altogether, we expect PPI to average around 3% in 2025.'
NOW READ: Budget 3.0: Fuel levy replaced VAT hike, but is it the better option?
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