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
June 26, 2025

Producer Price Inflation

May 2025

In May 2025, producer price inflation saw a small annual increase of 0.1%, down from 0.5% in April 2025. On a monthly basis, producer prices contracted by 0.3%. Notably, costs for food and beverage production rose by 3.7%, accounting for 1.1 percentage points of the monthly increase.

While deflation persists in several categories, significant annual decline was recorded in product category coke, petroleum, chemicals, rubber, and plastics— falling by 6.4%, compared to a 5.5% decrease in April. Transport equipment prices decreased by 0.4%, petrol by 4.6%, and parts for transport equipment by 0.4%.

Production costs for intermediate goods increased by 6.9% in May, following an 8.5% rise in April. Although this exceeds the South African Reserve Bank’s (SARB) inflation target range of 3% to 6%, the month-on-month increase was relatively modest at 0.9%. The annual rise was primarily driven by base effects from 2024 data.

Key contributors to the annual increase included:

  • Basic and fabricated metals, which rose by 12.3%, adding 6.1 percentage points.
  • Chemicals, rubber, and plastic products, which increased by 1.4%, contributing 0.4 percentage points.

In the primary sector, mining costs grew by 2.8% in May, following a 4.1% increase in April. The agriculture sector experienced a 6.0% rise, up from 4.4% in April.

Overall, the trend in producer price inflation for final manufactured goods continues to support favourable inflation expectations in South Africa. Consumer inflation remains low at 2.8%, below the SARB’s target of 3%. Despite the rise in intermediate goods prices—particularly water and electricity, which are still above target—the current inflation figures suggest that consumer inflation will remain low and stable in the near term.

This stability may encourage the Reserve Bank to consider lowering interest rates in July 2025, as inflation expectations from both consumers and producers still appear to be well contained for now.

Back to News

More Coverage

Mining Production and Sales for April 2026

In May 2026 South Africa’s mining sector slipped into contraction, down 5.4% month on month after April’s revised 8.0% gain — driven by steep declines in iron ore ( 12.7), coal ( 6.1) and PGMs ( 4.4) that together shaved several percentage points off output; mining output for the rolling quarter fell 1.7%, led by drops in manganese, other metallics and coal. Yet nominal mining sales surged 13.9% on a 70.5% jump in platinum, stronger gold and coal receipts, underscoring a split between weaker physical production and firmer export earnings. With the sector employing roughly 476,000 people, having expanded in Q1 2026 amid higher gold and platinum prices, the industry remains central to South Africa’s economy, even as it grapples with new trade tariffs (including US and proposed manganese measures), the loss of AGOA preferences, and uncertainty around the Mining Charter. Read the full report for detailed drivers, regional implications, and policy paths to stabilise output and sustain foreign earnings resilience

South Africa’s Inflation Dilemma: Why Bleeding an Anaemic Patient Won’t Cure the Illness

In “South Africa’s Inflation Dilemma: Why Bleeding an Anaemic Patient Won’t Cure the Illness,” the article navigates the precarious economic landscape facing South Africa amidst rising inflation and stagnant growth. With consumer demand faltering due to slow wage growth, recent fuel price hikes, and increased municipal fees, the country stands at a critical junction. The looming threat of another interest rate hike by the South African Reserve Bank could further cripple an already fragile economy, likened to an anaemic patient, with potential long-term repercussions for job creation and corporate investment. However, recent geopolitical developments offer a flicker of hope, as a ceasefire in the US-Iran conflict has led to a decline in global oil prices, promising immediate relief for consumers and a slower inflation trajectory. The article argues that maintaining the current repo rate is essential to allow this relief to translate into economic growth and stability. Dive into the full report to explore how South Africa can navigate these turbulent waters without sacrificing its fragile economic health.

Private Sector Credit Extension (PSCE): May 2026

In a rapidly shifting economic landscape, May 2026 saw credit demand growth of 8.6%, falling short of the anticipated 9.4% forecast. Since interest rate cuts began in September 2024, credit growth has generally surged, particularly following strategic interest rate reductions by the South African Reserve Bank amidst global tensions and skyrocketing energy costs. However, the South African property market stagnates due to soaring consumer debts, muted wage increases, and escalating living expenses, notably in household fuel and utility prices. While instalment credit sales posted a modest rise, the reliance on short-term credit underscores consumer struggles with surging living costs. With inflation hovering above target and persistent high fuel prices, the anticipated interest rate hike in July could further suppress demand, adding pressure to the already challenging economic recovery. Discover the dynamics shaping South Africa’s financial climate in this insightful analysis.

Producer Price Inflation – May 2026

In May 2026, producer price inflation surged to 7.8%, driven by significant fuel price shocks that impacted goods leaving the factory gate. Important sectors saw remarkable price hikes, with Coke, petroleum, and chemical products alone rising by 22%. Meanwhile, mining costs soared by 28.1%, heightening concerns about ongoing inflationary pressures. With consumer inflation climbing to 4.5%, surpassing the South African Reserve Bank’s target of 2% to 4%, the economic landscape is becoming increasingly unstable. Readers will find critical insights into how these trends affect overall inflation expectations and the imminent interest rate decisions that could shape South Africa’s economic future. Dive into the full report for a comprehensive analysis of these pivotal issues and their implications.

South Africa’s Crypto Crossroads: Modern Regulation or an Economic Time Machine?

Dive into “South Africa’s Crypto Crossroads: Modern Regulation or an Economic Time Machine?” an eye-opening exploration of South Africa’s latest Draft Capital Flow Management Regulations, 2026. As the South African government aims to modernise cross-border financial regulations and tighten digital currency controls, these proposed changes have sparked uproar among fintech leaders and legal experts. The draft threatens to overreach into constitutional rights, potentially stifling innovation and economic growth. With concerns over encroachments on privacy and powers to seize assets, critics argue that the regulations could deter investment and spark a talent exodus. As the public comment period extends, the country’s financial future hangs in the balance, poised between innovation and economic regression. Discover why industry stakeholders are on high alert and advocating for a careful recalibration of this legislative move.