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Thread: PPI rate causes!

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    Moderator IanF's Avatar
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    PPI rate causes!

    I heard on the radio (dangerous I know) that PPI had increased to 16.4%. No other info so I did some searching and found this.
    But according to van Dyk, hefty rises in steel prices was the main culprit for the "large increase" in PPI.

    She said that the double-digit rise in the steel price announced in May - which is approximately 18% across a range of steel products - by a leading steel producer was key to the larger-than-expected increase in the PPI in May.

    "The steel price increase, the fourth for 2008, was on the back of rising world steel prices and the rand's relative weakness on a year-to-date basis", she said.

    These increases coincided with Statistics SA's quarterly price survey, which led to such a hefty adjustment in the PPI, as basic iron and steel accounts for around 4.12% of the total index, she said.

    As such, the basic metals component contributed 3.2 percentage points to the 4.9% month-on-month increase. These developments reflect the vulnerability of producer inflation data to fluctuations in commodity prices, which currently is in a protracted boom phase.

    "If excluded, PPI would have eased to 12.2% year-on-year," said van Dyk. Fin24 article
    So instead of reporting this anomaly/snafu they blow up what this will do to interest rates, then the idiot economists without looking at facts support this.Where is the indepth reporting it was easy for me to find this
    Only stress when you can change the outcome!

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    Site Caretaker Dave A's Avatar
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    If we are to exclude the steel increase now, then we need to exclude steel from the previous year's figure too. And then what?
    The trouble with opportunity is it normally comes dressed up as work.

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    Site Caretaker Dave A's Avatar
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    A Business Report story on PPI here.
    Producer inflation continued to rise at a frightening pace last month - 16.4 percent over 12 months and more than 4 percent in the month, according to yesterday's release from Statistics SA. Kevin Lings, an economist at Stanlib, said last month's figure was the highest since 1989, while the monthly increase matched the highest on record, posted during the oil shock in the early 1970s.

    The figure is significantly higher than the 12.4 percent in April and way above the expectation of economists, who predicted a 12.3 percent rise in a Reuters poll.
    Looking again at the commentary on steel - I guess it might be OK to smooth out the increase's effect on the month, but surely you cant discount it for the year-on-year figure. It's real, and steel is not the only metal that has gone up by so much.
    The trouble with opportunity is it normally comes dressed up as work.

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    Moderator IanF's Avatar
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    Dave
    From Stats sa
    Accordingly Stats SA has decided to publish, as a supplement for analytical purposes, a table of price changes related to those products that have a major impact on the month to month and year to year variation but for which prices are only reported quarterly. The table below excluding the prices of iron and steel is the first of these. It shows that the exclusion of iron and steel results in a 1,1% movement MoM and a 12,2% YoY as opposed to 4,9% and 16,4% respectively.
    I agree you can't ignore the price gouging by the steel guys or for that matter the oil guys. But how much of the steel price flows through to PPI in the short term. Long term it should all flow through. So this may or may not have a dramatic effect on PPI and thus our interest rates. The other metals have also gone through the roof I just had a 25% increase in the aluminium plates I use but overall very little effect in the final price. But be warned we just got a letter that Mondi are going for a 15% paper price increase in August.
    Only stress when you can change the outcome!

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    Site Caretaker Dave A's Avatar
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    Well, it's good news on the PPI front at the moment. Amazing how quickly things can turn.
    South Africa's producer price index (PPI) rose by 12,6% year-on-year (y/y) in November from 14,5% y/y in October, Statistics South Africa (Stats SA) said on Thursday.

    The PPI dipped -1,3% on a monthly basis after October's monthly decrease of 0,5%.

    The PPI was expected to have receded to 13,7% y/y, a survey by I-Net Bridge found.

    All respondents predicted a drop from October, with forecasts among the eight leading economists ranging from a low of 12,8% y/y to 14% y/y.

    This was the third decrease in producer price inflation in just under a year.

    Stats SA attributed the rate in November to decreases in the annual rate of change for products of basic metals (from 50,3% to 47,7%), petroleum and coal (24% to 4,8%), food at manufacturing (from 15,6% to 13,4%), mining and quarrying (7% to 4,8%) and other manufacturers (7,2% to 5,8%).

    These were counteracted by increases in electricity (from 32,6% to 32,7%) and agricultural products (-3,8% to -1,5%).
    full story from M&G here
    The trouble with opportunity is it normally comes dressed up as work.

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