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Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
May 29, 2025

Producer Price Inflation

April 2025

In April 2025, producer price inflation experienced another modest annual increase of 0.5%, unchanged from March 2025. Notably, food and beverage production costs grew by 4.7%, contributing 1.4 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 5.5% from a 4.1% drop in March. Transport equipment also decreased by another 4.5%, petrol by 6.8%, and parts for transport equipment by 4.5%. Production costs for intermediate goods rose by 8.5% in April following the 7.4% in March, surpassing the South African Reserve Bank’s (SARB) inflation target of 3% to 6% yet again. The month-on-month rise was a mere 2.4%, with inflationary pressure largely attributed to base effects from 2024 data. Key contributors to the annual increase included:

  • Gold and metal ores: rising 21.7% and adding 5.8 percentage points.
  • Non-ferrous metal ores: up 2.9%, contributing 1.5 percentage points.
  • Stone quarrying, clay, and diamonds: up 26.0%, contributing 1.1 percentage points.

Mining costs in the primary sector increased by 4.1% in April following the 5.9% the prior month, while the agriculture sector saw a 4.4% rise, following March’s 2.4% increase. Overall, the producer price inflation for final manufactured goods trend still support favourable inflation expectations in South Africa, with consumer inflation at 2.8%, 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 just prompt the Reserve Bank to lower the interest rate today (29th of May 2025) as inflation expectation from both the consumer and producer side of the economy seems to be contained for the time being.

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More Coverage

Manufacturing Production

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In August, South Africa’s manufacturing output further declined by 1.5%, following a 1.3% decrease in July. This downturn was significantly below market expectations, which had forecasted a 0.3% increase for August. The Purchasing Managers’ Index (PMI) also fell by 1.4 points, from 50.8 in July to 49.5 in August 2025, indicating a less favourable business climate anticipated by manufacturers for the month.

Reviving South Africa’s Economy

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Gold and Foreign Exchange

September 2025
The South African International Liquidity Position, measured by Net Gold and Foreign Exchange Reserves, showed growth in both USD and Rand terms for September 2025.

Private Sector Credit Extension (PSCE)

August 2025
In August 2025, credit demand grew by 5.9%, slightly below the anticipated market prediction of 6.0% for the month. Since the initiation of interest rate cuts in September 2024, there has been a noticeable acceleration in overall credit growth, with most subcategories showing increases, particularly in July.

Internation Trade and Trade Balance

August 2025
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