Pretoria – The Production Price Index (PPI) came in at 10.4 percent year on year (y/y) in January, reported Statistics South Africa (Stats SA) on Thursday. On a month-to-month basis, January’s PPI increased by 1 percent.

Stats SA recently changed the structure of the PPI basket, with mining doubling its weighting and manufacturing being reduced.

The high annual rate of change at January 2008 compared with December 2008 can be explained by increases in prices for agricultural products, mining and quarrying, food manufacturing, beverages, petroleum and coal products, chemicals, rubber and plastics and electricity.

According to Stats SA however, the price increases were counteracted by decreases in the price of basic metals.

Econometrix Treasury Management (ATM) market analyst Karen Chow told BuaNews on Thursday, that international rising food prices, the exchange rate and the Rands poor performance over the last two months has placed pressure on the market.

“We weren’t expecting a sharp deviation [in the PPI figure], and today’s data is broadly in line with expectations, “said Ms Chow.

The weighting of food in relation to the PPI basket has halved, mining and quarrying has jumped up significantly and oil is now being weighted separately, she said.

Ms Chow added that PPI basket structure was changed to be in line with global practices. – BuaNews