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Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
April 25, 2025

Producer Price Inflation

March 2025

In March 2025, producer price inflation experienced a modest annual increase of 0.5%, down from the 1.0% rise in February. Notably, food and beverage production costs grew by 4.1%, contributing 1.2 percentage points to this increase. Although deflation persists in several categories, significant annual declines were recorded in products like coke, petroleum, chemicals, rubber, and plastics, which fell by 4.1% from a 1.8% drop in February. Transport equipment also decreased by 6.7%, petrol by 7.7%, and parts for transport equipment by 6.7%.

Production costs for intermediate goods rose by 7.4% in March, after an 8.4% increase in February, surpassing the South African Reserve Bank’s (SARB) inflation target of 3% to 6%. The month-on-month rise was a mere 0.1%, with inflationary pressure largely attributed to base effects from 2024 data.

Key contributors to the annual increase included:

  • Gold and metal ores, rising 16.6% and adding 4.6 percentage points.
  • Non-ferrous metal ores, up 3.8%, contributing 1.9 percentage points.
  • Stone quarrying, clay, and diamonds, up 38.0%, contributing 1.6 percentage points.

Mining costs in the primary sector increased by 5.9%, while the agriculture sector saw a 2.4% rise, following February’s 7.6% increase.

Overall, the producer price inflation trend supports favourable inflation expectations in South Africa, with consumer inflation at 2.7%, below 3.0%. Despite the rise in intermediate goods prices, particularly water and electricity, being above SARB’s target, current producer inflation figures suggest consumer inflation will remain low and stable in the near term. This stability might prompt the Reserve Bank to reconsider its interest rate stance for the remainder of 2025.

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More Coverage

Employment Statistics in South Africa

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The employment statistics for the first quarter of 2025 present a mixed picture across different sectors, as detailed in the table above. Some sectors experienced increased employment compared to the fourth quarter of 2024, while others saw a decline in job opportunities during this period. Overall, the unemployment rate edged higher from 31.9% in the previous quarter to 32.9% in Q1 2025. Meanwhile, the expanded unemployment rate decreased slightly from 41.1% to 40.3% during the same timeframe.

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Manufacturing Production

March 2025
In March 2025, manufacturing production in South Africa declined by 0.8%, following a 3.2% contraction in February. This decrease contrasted with the upward movement in the Purchasing Managers’ Index (PMI), which rose from 44.7 in February to 48.7 in March.

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Gold and Foreign Exchange Reserves

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The African International Liquidity Position, reflected by Net Gold and Foreign Exchange Reserves, grew in both USD and Rand terms as of April 2025. Despite a nearly 60c Rand depreciation against the dollar, reserves increased, boosted by a 4.7% rise in gold prices, which remain 41.4% higher than in 2024.
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