JOHANNESBURG, 30th SEPTEMBER 2021 – The Steel and Engineering Industries Federation of Southern Africa (SEIFSA), welcomes a further improvement in the Producer Price Index (PPI) for intermediate manufactured goods. Industry can be encouraged by the latest data, which shows the PPI for intermediate goods remaining in an expansionary terrain.
Commenting after the release of the results published by Statistics South Africa (Stats SA) today, SEIFSA Economist Ms Molise said that the results showed that on a year-on-year basis, prices for intermediate manufactured goods (measured in factory gate prices) marginally increased from 17.6% in July 2021 to 17.7% in August 2021, the increase is consistent with the annual change in the PPI for final manufactured goods, which also increased and from 7.1% in July 2021 to 7.2% in August 2021. The increasing trend in the PPI for intermediate manufactured goods is encouraging, as it is a good proxy for selling price inflation in the M&E sector and its improvement provides leeway for producers to improve on margins, Ms Molise said.
Ms Molise said, given that the PPI for intermediate manufactured goods has maintained an upward trajectory and with the eased lockdown level 2, businesses should therefore, leverage off the improvement in selling price inflation.
As business conditions have generally been tough amid low levels of domestic demand and higher intermediate input costs, compounded by the COVID-19 pandemic, recent lootings, increasing electricity prices and fuel prices, declining employment numbers and a weaker exchange rate, it is imperative that companies in the M&E sector take advantage of rising selling prices and the impending up-tick in demand from inter-linked industries, in order to boost production trends, Ms Molise concluded.