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Goods get cheaper to make

By Staff Writer

Goods get cheaper to make

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This morning the major story is that things are not as bad as the pundits thought they would be.

Producer Price Inflation (PPI) has slowed from over 19% to 16% which means that it is getting cheaper to produce goods.

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The Times pointed out that most of this slow down is related to the decreasing petrol prices and slowing costs of electricity. However these stats are also seasonal and the summer Eskom tariff is a driver.

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Business Day also reported on the PPI figures stating that they fell more sharply than expected. This should lead to a better climate to cut interest rates in. It should also have a positive effect on the inflation outlook. The drop in the PPI was reported as being the sharpest monthly dive since the data was first collected in the 1970's.

The interviewed economist was of the opinion that rate cuts would be most likely to start from April next year rather than February. Another economist felt that the figures were pointing to the next interest rate move being of the downward variety, rather than a raise. A third economist reckoned that the Reserve Bank was still too worried about a host of factors to just start cutting rates now, just hoping that the inflationary cycle has come to an end.

The pain is likely to continue into the New Year at least.

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The Dispatch carried the PPI story too. In general their interviewed economists were of the same view as all the others regarding the causes of the PPI slowdown, but with just a touch more caution, reckoning on the first interest rate cut happening in June of next year.

The Dispatch also reported that Venezuela had called for OPEC to further cut oil production in December. This would lead to a rise in oil prices. Which would be passed on to the consumer in the form of a petrol hike. So there are still things to worry about.

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Another major story today is the JSE's recovery on the basis of foreign capital inflows as wary investors feel better and start heading back to the bourses. Foreigners had been net sellers the last month but this seems to be turning now. However other experts believed the JSE surge to be domestic buyers coming back into the market with a number of professional derivative books contributing to the large volume of trades made this week.

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And finally iAfrica carried a story describing how almost seven out of ten people are struggling with debt.

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