South African PPI for final manufactured goods increased to +1.1% y/y in January 2025 from +0.7% y/y in December last year. The latest increase outpaced the +1.0% y/y uptick expected by consensus estimates.

Unsurprisingly, the latest increase in the PPI print was largely due to ‘coal & petroleum’ products becoming less deflationary (-5.8% y/y in January from -10.0% y/y in December) as fuel costs rose.

Additionally, higher ‘food’ inflation (+4.8% y/y in January from +4.5% y/y in December) also contributed to the latest higher headline reading.

Other PPI categories reported mixed results in January.

Finally, intermediate goods inflation jumped to +7.3% y/y in January from +5.8% y/y in December, marking the fifth straight monthly increase.

Why does it matter?
Despite three consecutive months of higher PPI readings, producer inflation remains very low. Gradual increases in producer prices are welcome, as they point to ongoing moderate increases in CPI.

More broadly, however, ongoing and notable accelerations in intermediate goods inflation, along with rising fuel costs, could well lead to a faster rise in future PPI readings.

Thus, CPI increases could gain momentum further out in 2025, especially considering the higher electricity costs that take effect in April.