Things are getting cheaper to make

By Staff Writer

There are two main components to measuring inflation. CPI which is the Consumer Price Index measures inflation by a basket of consumer goods. The second measure is PPI or the Producer Price Index which measures 'factory gate' inflation or how much more expensive it is to make things. Like consumer inflation is coming down so is producer inflation, and the latest stats show a whopping 4.1% decrease. This means it is now getting cheaper to make goods but the question remains will these savings be passed on to the consumer by the retailers.

 

  • PPI leads CPI
  • Food prices still high
  • Retailers might profit take

 

It has been a hard year for everybody and with the high inflation environment we experienced last year the knock on effects are only now filtering through into the shops. The drastic decline in PPI indicates that goods should get cheaper in the shops in the next few months as manufacturing costs rise less fast. However retailers are needing to make up lost revenues due to the downturn and may be tempted to profit take by not passing on these slower rising increases to the consumer. The competition commission is investigating the large supermarkets so they should pass the savings to consumers but smaller retailers may not.

Interest rates have been used to control inflation and the cuts that were made in the first half of this year are now starting to manifest in the economy. Inflation appears to be coming under control and is a fitting leaving present for The Guv Tito Mboweni. His successor may take a different view regarding inflation targeting but as long as real prices don't increase beyond what they should, then the economy will do better. The important thing is to plan your budget and don't expect prices to come down. They will rise, just hopefully not as quickly as they were. So plan your budget and stick to it, we are not out of the recession yet.

Recent Articles

Featured Register your customary marriage or lose the right to inherit estate

December is that time of the year when we will see at least one suitor sending his uncles to negotiate the price of his future wife. Lobola, as the bride price is known, has always been an important element of the African marriage.

Read more

Changing from one medical scheme to another - effortlessly

It is coming up to the end of the year and you might be looking to change medical schemes, or options within a scheme in preparation for the new year. While you don’t necessarily have to wait for year-end to do so, providers often recommend it.

Read more

Your guide to financially surviving Christmas

There are a few times each year where you need to dig deeper into your pocket and spend more money such as birthdays, anniversaries, and the Christmas period. Whether you celebrate this religious holiday or not, the festive period - depending on how you choose to spend it - means increased travelling, buying of gifts, entertaining, and eating out at restaurants.


Read more

Trump, Trump and a little bit of South Africa

What a November we had, with the rand staging one of its best months and closing below the R14.00 level. To be honest, this looked like quite a far-fetched possibility at one stage during the month. It seems that the tide has changed a little, even though it might be short lived since the US dollar bulls are not so sure of their case anymore.

Read more

Sign Up

To our weekly newsletter for advice you can bank on

Deals

Free iCollege Scholarship

Price: R600
When: Until 16 May 2019
Where: Nationwide

Telkom December Big Deal

Price: R459 pm
When: Until 31 December
Where: Nationwide

Money Savvy Kids Giveaway

Price: R450
When: 8 December
Where: Johannesburg (Milpark)