This rate is 0.2% higher than the corresponding annual rate of 18.9% at July 2008, according to the data released by Statistics South Africa on Thursday.
The higher annual rate in August 2008 compared with that in July 2008 is as a result of increases in the annual rate of change in the Producer Price Indices for basic metals, electricity, food at manufacturing, fishing, chemicals and chemical products, metal products, transport, non-electrical machinery, equipment and beverages.
These increases, according to Stats SA, were partially counteracted by decreases in the annual rate of change for of petroleum and coal which decreased from +40.8% at July 2008 to +36.0% at August 2008, mining and quarrying which decreased from to +15% and agricultural products which decreased to +2.3% in August 2008.
From July 2008 to August 2008 the PPI for domestic output increased by 0.5%.
“The monthly increase of 0.5% in the PPI for domestic output is mainly due to monthly increases in the price indices for transport equipment (+0.3 of a percentage point) and non-electrical machinery and equipment (+0.2 of a percentage point),” said Stats SA.
For exported commodities, the data shows an annual rate of increase of 7.8% at August 2008. This rate is 0.5 of a percentage point higher than the corresponding annual rate of 7.3% at July 2008.
While the drop in fuel prices in August should have helped ease input costs, acceleration is still expected in the headline number due to sub-components like mining and quarrying and chemical products inflating.
PPI is now based on an updated set of weights, as well as the prices of SA output, whether the output is sold in the domestic market or exported.
The re-weighting has resulted in the metals, minerals and oil components receiving heavier weightings, which was a big factor behind some of the higher outcomes from May.
On Tuesday, the Stats SA reported that the Consumer Price Index excluding interest on mortgage bonds (CPIX) rose to 13.6% year-on-year (y/y) in August 2008, up 0.6% on the July rate of 13%.
"The likelihood of interest rate hikes is not out of the realms of possibility at the moment, as the South African Reserve Bank could introduce strong interest rate hikes to boost the Rand.
"A number of interest rate hikes could be used to strengthen the currency [should it drop significantly], as high interest rates attract foreign investors who take a currency at a particular interest rate and then invest in South Africa where the returns on the their investment will be high," Lamberti told BuaNews at the realise of the data.
He does not foresee any interest rate cuts in the near future, adding the latest retail figures show South Africa's retail industry has also slowed significantly.
The South African Reserve Bank has raised interest rates six times since 31 May 2007, to tame inflation, which is being stoked by higher food and energy costs.
Consumer-price growth accelerated to its third consecutive record in August, reaching a higher-than-expected 13.6%.
It was also the 17th straight month that it exceeded the central bank's 6% ceiling.
South Africa is "running the risk of real negative interest rates" as inflation exceeds the benchmark rate, Reserve Bank Governor Tito Mboweni told lawmakers in Cape Town earlier this month.
Price growth in the continent's biggest economy will remain “higher than expected”, even after the statistics office makes changes to the consumer price index next year, he said.
Article published courtesy of BuaNews
