Producer inflation slows sharply in August as food prices fall

South Africa’s producer price inflation slowed sharply in August, with factory-gate prices falling 0.4% from July and annual inflation easing to 5% from 5.7%. The latest reading from Statistics South Africa was below the 5.5% consensus forecast cited by Bloomberg, marking the third consecutive monthly slowdown in producer inflation.

The biggest contributor to the annual increase was the coke, petroleum, chemical, rubber and plastic products category, which includes fuel prices. Its annual inflation rate slowed to 13.6% in August from 15.7% in July, while the category detracted 0.3 percentage points from the monthly PPI rate. Fuel prices rose by R1.34 a litre in September, while diesel climbed close to R3 a litre, indicating renewed pressure on producer inflation in the months ahead.

Food products moved further into deflation in August, with annual producer inflation for food products falling to -0.6% from 0.3% in July, and the broader food, beverages and tobacco category contributing just 0.4% to the annual PPI rate. Meat and meat products were among the biggest sources of downward pressure, with prices falling 5.8% year on year, compared with a 3.4% decline in July. Grain mill products, starches and starch products and animal feeds also remained firmly in deflation, with prices down 9.6% year on year.

The softer food prices are being supported by a strong agricultural harvest, with the 2025/26 summer grain and oilseed crop forecast at a record 21.6 million tonnes, about 5% higher than the previous season. The latest PPI figures therefore provide some relief on the food front, but the outlook could become more difficult if elevated oil prices continue to push up transport and production costs. The figures come shortly after Stats SA reported that consumer inflation increased slightly to 4.4% in August from 4.3% in July.

Read the full story at IOL.