Consumer Price Index (CPI) data released on Wednesday showed that a decline in the Producer Price Index (PPI) increased the chances of inflation easing, said chief economist of Steel and Engineering Industries Federation of Southern Africa (Seifsa), Michael Ade.
He noted that there was a direct correlation between changes in the PPI at the retail level (finished goods) and consumers at the point of sale (CPI).
The CPI dipped below 5% for the first time in two years, with consumer price inflation down from 5.1% in June 2017 to 4.6% in July.
“The CPI is the main gauge of prices of goods and services and the release [of the data] is most welcome to the public as the lower rate will reduce pressure on both over-indebted consumers and companies’ operational costs,” said Ade.
He pointed out that the CPI and PPI were important to the metals and engineering sub-component of manufacturing sector as both played a key role in financial decisions, cost mitigation and contract price adjustments in the industry.
