Guiding consumers since 2009

PPI shock drop

By Staff Writer

Compare banks and save with Justmoney

PPI shock drop 

The Producer Price Index (PPI) was released by Statistics SA yesterday.

The PPI is basically a measure of inflation for making stuff.

The cost to produce goods is affected by inflation like everything else. The PPI has slowed to 12.6% in November 2008 as an annual percentage change, from 14.5% in October 2008.

This is an unexpectedly large slide, and is positive news. As stuff gets cheaper to make, in theory, these cuts should be passed onto the consumer and stuff should get cheaper to buy. This is not guaranteed and hard hit retailers may not pass their savings from the factory gate onto your plate just yet.

Instead they may take a bit of profit or shore-up their cash reserves to protect against uncertainty.

The financial newswires covered this story from various perspectives.

Business Day reported that the market had predicted PPI to be at 13.7% for November. The article also mentioned that economists don't consider the PPI as an accurate indication of CPI or consumer inflation due to it not measuring services, only goods.

There is also the issue of savings not being passed onto the consumer.

The Times looked at this story and got its teeth into the meat of it.

They picked out the various factors that have influenced the PPI and worked out for us what its main drivers were.

There were sharp increases in eggs, vegetables and fruit and nuts. This was mitigated by falls in 'other agricultural products'. The 'overall agricultural inflation was 0.5 percent from October to November, taking the year's deflation to 1.5 percent'.

In the manufacturing sector 'Car parts and accessories got 18.8 percent more expensive year-on-year'. The article noted that the now steady downward trend in both consumer and manufacturing inflation was an indication that we can expect rate cuts next year.

BUA News said that the lower PPI can be attributed to 'decreases in the annual rates of change for basic metals, products of petroleum and coal, mining and quarrying'. These decreased were also offset slightly by increases in inflation for electricity and agricultural products.

The Dispatch carried a series of statistics looking at PPI, imports, exports and the make up of the PPI.

It looks like things are getting better, but it could be worse, much worse.

The Times carried a story that inflation in Zimbabwe has hit:

41 900 000 000 000 000 000%!

Justmoney does not even know how to pronounce a number that big, and our spell checker does not recognise it either, but our inflation rates, while high, pale in comparison to that.

The turn around appears to be coming, but don't go crazy just yet, rather get a savings account and budget frequently, so that when the good times really do come back you have got money to spend.

Recent Articles

Featured What’s the deal with underwriting?

When you apply for a long-term insurance policy, a financial adviser will ask some personal questions about your lifestyle, family history, health, and even ask you to take some medical tests. This process is called underwriting, but is it really necessary?

 

How are you taxed on your retrenchment package?

Unemployment is one of the biggest problems in South Africa. The emergence of the Covid-19 pandemic has exacerbated the situation with a lot of companies retrenching their employees.  When retrenched, you’ll receive a retrenchment package, but do you know how much tax you’re liable for?

Car repossessed – don’t be taken for a ride

When the country is facing an economic downturn, chances are your finances will feel the pinch. This can lead you to make bad financial decisions such as skipping your vehicle payments. But every decision has consequences and if you don’t pay your instalment, the bank will repossess your car. But what can you do when this happens?

 

Why you should consider gap cover

Your medical aid should protect you from incurring large medical bills when you’re sick. But what if your plan doesn’t cover the full cost of your medical expenses? We got in touch with insurance experts to find out whether gap cover is worth having.

Deals

Office furniture at discounted prices at BDK

Price: Available on request
When: Daily
Where: Johannesburg

Da Vincis Happy Hour Special

Price: Available on request
When: Daily
Where: Cape Town

Use your Absa card and get 30% cashback at Dis-chem

Price: Available on request
When: Daily
Where: Nationwide


Latest Guide

Guide to debt rehabilitation solutions