The latest PPI figures are in and it's not looking good.
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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Business Report goes a bit further.
The cost of labour, one of the key determinants of producer costs, had put huge pressure on factory gate prices, economists said yesterday.


The Reserve Bank's quarterly bulletin last week showed that nominal remuneration per worker increased 7.2 percent last year, compared with the consumer price index's average rise of 3.4 percent and the PPI's 3.1 percent.

The bulletin pointed out that the acceleration in the rate of increase in average remuneration per worker, combined with a deceleration in labour productivity growth, caused the rate of increase in nominal unit labour costs in the formal sector to pick up markedly. These rose from below the inflation target ceiling of 6 percent to 7.6 percent in the first quarter.
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