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Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
March 6, 2026

Producer Price Inflation – January 2026

In January 2026, producer price inflation fell from 2.9% in December to 2.2% after minor revisions to producer price category weights. However, producer inflation fell by 0.2% month-on-month. Significant cost increases were noted in the following categories:

  • Food and Beverage Production: Increased by 2.2% and contributed 0.7 percentage point,
  • furniture and other manufacturing: Rose by 12.2% year-on-year while contributing 0.5 of a percentage point.

Production costs for intermediate goods rose by 10.5% in January, following a 10.1% increase in December. This indicates a clear inflationary trend that requires attention, as these increases exceed the South African Reserve Bank’s (SARB) new inflation target range of 2% to 4%. Annual growth is still significantly influenced by base effects from the 2024/25 data.

In the primary sector, mining costs climbed by 28.4% in January, following a 25.7% rise in December. In contrast, the agriculture sector experienced a further 5.8% decline, following a 5.0% decrease in December.

Overall, the trend in producer price inflation for final manufactured goods supports positive inflation expectations in South Africa for the short to medium term. Consumer inflation remains low at 3.5% for January, closely aligned with SARB’s target of 3%. While prices for certain intermediate goods—particularly water and electricity—exceed the target range, current figures suggest consumer inflation will likely remain low and stable in the near future.

This stability has allowed the Reserve Bank to lower interest rates at the November Monetary Policy Committee (MPC) meeting while keeping the rate unchanged during the January 2026 meeting, as both consumer and producer inflation expectations appear well-managed at this time. The Bank’s interest rate decision will consider both the Consumer Price Index (CPI) and Producer Price Index (PPI) when analysing inflation expectations for the first quarter of 2026.

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