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The Citizen
5 days ago
- Business
- The Citizen
Producer Price Index remains unchanged, but an increase is coming
'Altogether, we expect PPI to average around 3% in 2025'. 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?
IOL News
08-05-2025
- Business
- IOL News
Fuel price decrease brings relief to South African households and businesses
The agriculture sector, economists, and workers' trade unions have responded well following the news of a decrease in the petrol price which came into effect on Wednesday. The agriculture sector, alongside economists and trade unions, have expressed optimism following the recent announcement of a fuel price decrease in South Africa. Minister of Minerals and Petroleum Resources Gwede Mantashe, revealed on Friday that the reductions apply to all grades of petrol and diesel, with petrol prices seeing a reduction of 22 cents per litre and diesel dropping by as much as 42 cents per litre. An economics professor at the North-West University, Waldo Krugell, said even modest reductions in fuel prices can lighten household budgets. 'In the macro picture, it also helps to keep the average inflation rate low. It is good news for households and businesses,' Krugell said. 'In addition, we were worried about the impact of the VAT rate increase, but that is now off the table. With these positives, consumption spending may still make a significant contribution to driving economic growth this year.' Abigail Moyo, spokesperson of the trade union UASA, said that the decrease in fuel prices was excellent news for motorists, commuters, and businesses, especially those in agriculture. 'Lower fuel prices provide financial relief to South Africans and substantially impact inflation, which affects the overall cost of living.' Moyo added that for the agriculture sector, the lower cost will help reduce production costs during increased fuel demand due to the summer crop harvest and the planting of winter crops. 'Fuel accounts for nearly 13% of input costs in grain production. UASA is pleased that this decrease in fuel prices will help contain food inflation and overall headline inflation, providing the South African Reserve Bank with the opportunity to lower or maintain interest rates at beneficial levels for consumers.' Congress of South African Trade Unions (Cosatu) spokesperson Matthew Parks said the fuel price decrease will provide relief for millions of workers and commuters struggling to cope with the rising costs of living. 'Whilst appreciating this relief, it's critical that the government returns to engagements at Nedlac on further measures to reduce the costs of fuel,' he said. Parks added that it's equally critical that measures to support Eskom to provide affordable electricity be expedited and similarly measures to ensure Transnet and Metrorail return to full productivity to help shield food and passenger rail from inflation. Mervyn Abrahams, co-ordinator for the Pietermaritzburg Economic Justice and Dignity (PMBEJD), said that petrol was one of the important components in the food ecosystem because it ensured the movement of goods from the production point to the consumption point, with other factors also coming into play. 'Our household affordability index has shown that food prices continued to climb in April. While this fuel price drop is the fourth one in the year, this does not seem to have filtered through to consumers. We would like to see consumers benefiting from the fuel drop.' Abrahams added that there should not be a compromise on food and access to food because of fuel prices. Wandile Sihlobo, chief economist of the Agricultural Business Chamber of South Africa (Agbiz), said that the easing of the fuel price came at a critical time for South Africa's agriculture. 'Fuel consumption generally occurs throughout the year, but harvesting is one of the highest usage periods. We are harvesting grains, oilseeds, and citrus. The underpinning driver of the decline in fuel prices is the decrease in Brent crude oil prices, which are influenced by increased oil output in major producers, among other factors,' he said. BUSINESS REPORT
Eyewitness News
01-05-2025
- Business
- Eyewitness News
National Treasury under pressure to kick-start spending review, starting with cuts to government perks for executive
JOHANNESBURG - National Treasury is again under pressure to kick-start a spending review, starting with cuts to government perks for the executive. To break the deadlock after budget 2.0, the Democratic Alliance (DA) is among the parties that have called on government to bring down expenditure to cut out waste and free up fiscal space for other priorities. After two failed budgets, the treasury will now have a third bite at it with a full reset expected on May 21. This includes a fresh fiscal framework, appropriation bill and division of revenue bill. READ: South Africans shaped VAT reversal: 'When people speak, we must listen' - Godongwana The North West University economics professor, Waldo Krugell, says corporate income tax and personal income tax are unlikely to be the first port of call to raise taxes in budget 3.0. 'That's even more complicated than increasing VAT and there's a lot of research that needs to go into that. The company tax rate and the personal income tax rate are already high in international terms. I think the options he has there would be really limited.' Krugell says, outside of the more technical options, there are low-hanging fruit to help bring down runaway spending. 'There's an easy way and a hard way. The easy way is to review the top line items and make symbolic cuts and take money away from the blue light brigade, things like that. The hard way is to ask ourselves what we want to achieve as a society, and what's going to contribute to that.'
