Johannesburg, 27 January 2022 – The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) is pleased with the PPI for intermediate manufactured goods data, as reported by Statistics South Africa (Stats SA) today.


The latest data published by Stats SA indicates producer price indices which is a measure of the average change in the prices of goods either as they leave their place of production or as they enter the production process. PPI is used for a variety of purposes, such as: a short-term indicator of inflationary trends and for indexing long-term contracts to take the inflationary risk out of the contract in contract price adjustments.


The Stats SA data shows that on a year-on-year basis, the PPI for intermediate manufactured goods remains at 23.1 percent for December 2021. Economist at SEIFSA, Ms Molise stated that “the main contributors to the annual rate were: chemicals, rubber and plastic products, basic and fabricated metals and sawmilling and wood. While the PPI for final manufactured goods for the broader manufacturing sector also increased to 10.8 percent in December 2021, up from 9.6 percent in November 2021 on a year-on-year basis”.


Prices for intermediate manufactured goods, have increased from a low base in 2021 averaging at 16.2 percent.  While the increase in prices for intermediate goods over the 12-month period in 2021 is relatively positive news for the producers of intermediate goods within the M&E sector in terms of increasing profit margins by passing cost increases to customers, however, in depressed market conditions, this may have negative implications in terms of affordability from a customer base perspective, Ms Molise said.

The increasing trend in PPI, tends to result in future inflationary pressure in the prices of consumer goods, as seen in the recent annual headline consumer price inflation (CPI) figures, coming at 5.9 percent in December 2021, up from 5.5 percent in November 2021, which is the highest annual increase since March 2017, indicating an increase in the cost of living.


For the period January 2021 to December 2021, PPI for intermediated manufactured goods data has significantly improved, which provided an opportunity for businesses to leverage in trading opportunities. With global producer price inflation rates increasing, as the global economy slowly picks up in 2022, the overall inflationary outlook domestically could pose as a concern at consumer level and at industrial production level as high unemployment rates, weaker exchange rate, rising fuel costs and escalating electricity costs continue to pose significant barriers to growth for the overall M&E sector.