South Africa's producer price inflation (PPI) rose by 9,2% year-on-year (y/y) in August from an 8,1% y/y increase in July, Statistics South Africa (Stats SA) said on Thursday.
The PPI rose 1,5% on a monthly basis after July's monthly rise of 1,7%
"PPI inflation came well above expectations in August," said Annabel Bishop, economist at Investec. "The upward price pressure was fairly broadly based, with oil prices accounting for 0,3% of the total 1,5% month-on-month [m/m] increase, food price pressure 0,3% [of the total 1,5% m/m increase] and electricity costs [0,1% of the total m/m increase], and rising costs of machinery, equipment and basic metals accounting for the remainder.
"We believe PPI inflation will continue to rise over the remainder of the year, climbing above 10% by December, and that the South African Reserve Bank will hike interest rates by 50bp at its October meeting."
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