Producer Price Index (PPI) in South Africa

The Producer Price Index (PPI) measures the change in factory-gate prices of goods in South Africa. The headline figure covers final manufactured goods: it gauges price pressure at source, before it reaches the consumer, and is a leading signal for inflation.

Stats SA collects monthly prices for a sample of domestically produced goods and builds a Laspeyres index (base December 2023=100). The year-on-year (vs. the same month a year earlier) and month-on-month (vs. the previous month) rates are computed on the final manufactured goods index.

It is a leading indicator of consumer inflation and a reference for SARB rate decisions. A rising PPI foreshadows CPI pressure (negative for the rand if it forces high rates); a falling PPI eases that pressure.

It covers only goods (not services) at factory-gate prices, so its pass-through to the CPI is partial and lagged. It is sensitive to volatile components (energy, metals, fuels) and weights/base year are revised every few years, introducing base breaks.