Rebound in selling price inflation data is encouraging, says SEIFSA
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The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) welcomes the latest Producers Price Index (PPI) data, which shows an uptick in selling prices for primarily intermediate goods of the metals and engineering (M&E) sector, Economist Marique Kruger said.
The data, released by Statistics South Africa this morning, shows a rebound in the PPI for intermediate manufactured goods from -1.5 percent in December 2019 to 0.7 percent in January 2020. The increase is consistent with the annual change in the PPI for final manufactured goods, which increased to 4.6 percent in January 2020, from 3.4 percent in December 2019.
Speaking after the release of the data, Ms Kruger said that given the volatile historical trend of the PPI owing to factors affecting supply, the latest manufactured goods data is encouraging.
“Producers prefer stability in the data which enables forward planning in a difficult business climate, underpinned by difficulty in passing on price increases onto the market. Moreover, the volatility in selling prices compels manufacturers to absorb unusual spikes in input and material prices in order to stabilise selling prices and keep loyal clienteles,” she said.
Ms Kruger said that generally, the latest data is good for businesses which are provided with an opportunity to perk-up margins and leverage cost-push inflation, also enabling their sustainability. This, she said, would provide impetus for growth in the M&E sector, as well as the broader manufacturing industry and the economy.
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