Skip to main content
Invest Now
012 012 5270
Copyright © Aluma Capital (Pty) Ltd. All rights reserved.
Aluma Capital (Pty) Ltd is a registered Financial Services Provider (FSP 46449) in terms of The Financial Advisory and Intermediary Services Act (37 of 2002)
Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
November 28, 2024

Producer Price Inflation

October 2024

Producer Price Inflation in South Africa saw a deflation of 0.7% in October 2024, exceeding analysts’ expectations. This decline was driven by significant price drops in coke, petroleum, and related products. While overall inflation may remain low in the short term, rising costs for intermediate goods and administered prices raise concerns. Persistently low inflation could lead to interest rate cuts, potentially boosting consumer and business demand in 2025.

In September 2024, producer price inflation experienced a significant slowdown. The annual increase in producer inflation was recorded at 1.0%, down from 2.8% in August, with a monthly deflation of 0.3%. Production costs for food and beverage items rose by 3.8% in September, contributing 1.1 percentage points to the month’s overall producer inflation. Additionally, the categories of metals, machinery, equipment, and computing reported lower-than-expected price increases, climbing 3.4% year-over-year compared to 3.5% in the previous month, and adding 0.5 percentage points to total producer inflation.

Several segments within the producer price inflation basket experienced deflation once again. Significant declines were noted in the coke, petroleum, chemicals, rubber, and plastic products categories, which fell by 2.1% year-on-year, leading to a reduction of 0.5 percentage points in overall producer inflation.

Production costs for intermediate goods saw a slight increase from 4.2% in August to 4.8% in September, with no month-on-month price escalation. The main contributors to the annual increase included the chemicals, rubber, and plastic products category, which rose by 8.1% in September, adding 2.5 percentage points to total intermediate producer inflation, and basic and fabricated metals, which increased by 3.6%, contributing an additional 1.7 percentage points. Meanwhile, the costs of water and electricity remained elevated, with a 9.8% annual rise in September, up from 7.1% the previous month.

In the primary sector, mining costs further contracted by 4.8% following a contraction of 1.7% in August. In contrast, the agricultural sector reported a 3.6% increase in production costs, a decrease from 6.1% in August.

Overall, the trend in producer price inflation is positive for general inflation expectations in South Africa, as producer inflation serves as a leading indicator of overall inflation in the country’s economic landscape. However, the continued rise in prices for intermediate goods, especially for water and electricity, remains a concern since these rates exceed the South African Reserve Bank’s (SARB) target range of 3% to 6%. The current producer inflation figures suggest a potential reduction in overall consumer inflation in the coming months, which is favourable for our interest rate and demand forecasts for the remainder of 2024.

Back to News

More Coverage

 A view on Demand in the Economy: Retail Sales performance – February 2026 Data

In February 2026, South Africa witnessed a 1.6% rise in retail sales, signalling a fragile yet ongoing recovery in consumer demand, though falling short of the 4.8% expected by analysts. Despite challenges like rising administered prices and sluggish wage growth, this growth persists. Factors such as interest-rate cuts between September 2024 and November 2025 support the retail upswing, highlighted by a rise in both the South African Chamber of Commerce’s business confidence index and the FNB/BER consumer confidence index. Key contributors to the February increase include a 9.4% rise in sales from other retailers and a 3.9% uptick in textiles and apparel, indicating cautious but sustained recovery amidst economic uncertainties.

Consumer Inflation – March 2026

In March 2026, South Africa’s Consumer Price Index (CPI) rose 3.1% year-on-year, slightly above the previous month’s 3.0% and below the forecast of 4.1%. This was mainly driven by increases in housing, utilities, food, and financial services, pushing services inflation just over the Reserve Bank’s upper target limit. As rising inflation erodes purchasing power, many rely on short-term credit, increasing exposure to economic shifts. The Reserve Bank, cautious amid global uncertainties like the Middle East conflict and high fuel prices, maintained interest rates, although potential hikes loom to stabilise prices. Despite positive but modest economic growth, ongoing global tensions, notably the US-China tariff dispute and potential BRICS tariffs, alongside persistent high oil prices, threaten stability. The focus on maintaining price stability and safeguarding the Rand’s value remains paramount as South Africa navigates these challenges in 2026.

The Great Commodity Seesaw: How South Africa’s Gold Shield is Blunting the Oil Shock

In “The Great Commodity Seesaw: How South Africa’s Gold Shield is Blunting the Oil Shock,” the South African economy stands precariously amidst soaring international oil prices and unprecedented gold values. While the country’s heavy reliance on imported fuel hurls motorists toward escalating costs, the shimmering promise of high gold prices provides a vital financial reprieve. This enrichment helps cushion the national accounts, aiding in balancing the trade surplus and reinforcing the currency during geopolitical unrest. Yet, with Eskom’s reliance on diesel to stabilize electricity supply, any unexpected outages could spell inflationary turmoil, rocking the economy’s already fragile state. As the country braces for potential fiscal challenges ahead, the question looms whether the golden buffer can truly shield the nation from impending economic turbulence

From Grid Crisis to Digital Gold: South Africa’s New Crypto-Energy Nexus

South Africa’s story is shifting—from the frustration of load shedding to the emergence of a bold new opportunity. As we move through 2026, an unexpected partnership between energy and cryptocurrency is reshaping the economic landscape. With Eskom exploring ways to monetise surplus solar power and SAA embracing Bitcoin for transactions, the country is stepping into a new era where digital finance and energy innovation converge—unlocking fresh potential for businesses, investors, and growth.

Mining Production and Sales for February 2026

Discover the dynamic shifts within South Africa’s mining sector with our latest analysis. In a remarkable February 2026 performance, mining activities surged by 9.7%, spearheaded by dramatic increases in PGM, chromium ore, manganese, and gold production. Despite a quarterly dip, February’s nominal sales skyrocketed by 58.3%, driven by remarkable gains in platinum and gold. As the backbone of South Africa’s economy, the sector faces evolving global challenges and opportunities, from new US tariff measures to geopolitical tensions affecting global trade and energy prices. Stay ahead with insights into the sector’s resilience and strategic importance. Read the full article to understand the trends shaping South Africa’s economic landscape.