{"id":838322,"date":"2025-09-25T14:10:43","date_gmt":"2025-09-25T12:10:43","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=838322"},"modified":"2025-09-25T14:11:10","modified_gmt":"2025-09-25T12:11:10","slug":"price-pain-coming-for-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/838322\/price-pain-coming-for-south-africa\/","title":{"rendered":"Price pain coming for South Africa"},"content":{"rendered":"\n

Producer inflation in South Africa ticked higher than expected in August, with economists warning that more price pressure is coming in 2026 as higher electricity prices filter through.<\/p>\n\n\n\n

Producer price inflation (PPI) increased to 2.1% year-on-year in August, against expectations of 1.8% from economic surveys.<\/p>\n\n\n\n

The higher prices were primarily driven by the food, beverages and tobacco products category, which alone contributed 1.3 percentage points to headline PPI.<\/p>\n\n\n\n

Inflation for food, beverages and tobacco rose from 3.9% in July to 4.3% in August as food prices grew by 4.1% year-on-year. <\/p>\n\n\n\n

Within food, the rise emanated mainly from meat and meat products, which stayed elevated at 18.5%, reflecting the impact of the foot-and-mouth outbreak in the country. <\/p>\n\n\n\n

Most other categories also recorded price increases, with fruit and vegetables up from 4% to 4.9%, oils and fats from 0.7% to 1.7% and bakery products from 1.8% to 2.4%. <\/p>\n\n\n\n

However, grain mill products contracted for the third consecutive month, but the rate of decline moderated from -2.7% to -2.4%. Dairy product prices slowed from 1% to 0.7%.<\/p>\n\n\n\n

Pressure on producer prices was mixed in other segments, though lower petrol and diesel prices helped keep this under control.<\/p>\n\n\n\n

Looking at the other segments, the producers saw deflation in coke, petroleum, chemicals, rubber, and plastic products, which moderated slightly from 1.9% to 1%. Chemical products rose, increasing from 2.8% to 3%. <\/p>\n\n\n\n

Petroleum products continued to deflate, driven by lower fuel prices on the back of lower global oil prices and a firm rand. <\/p>\n\n\n\n

The rate of decline in the price of petrol deepened to -7.8% from -7.0%, but diesel slowed from -7.0% to -2.8%.<\/p>\n\n\n\n

Metals, machinery, and equipment prices increased from 0.1% yoy to 1.1%, lifted by higher \u2018structural and fabricated metal products\u2019 and \u2018general and special purpose machinery\u2019, which outweighed further price declines in household appliances and office machinery.<\/p>\n\n\n\n

PPI for electricity and water slowed from 4.9% to 4.6%, pulled down by electricity prices, which eased from 3.7% to 3.4%. Water prices remained elevated and steady at 11.6%.<\/p>\n\n\n\n

PPI for agriculture, forestry, and fishing fell from 6.5% to a five-month low of 3.0%. <\/p>\n\n\n\n

The drag mainly came from crops and horticulture (-5.2%), as cereals and other crops (-7.5%), and milk and eggs (-4%) prices fell. Prices of live animals increased by a further 18.8%<\/p>\n\n\n\n

Price pain ahead<\/h2>\n\n\n\n
\"\"<\/a>
Nedbank chief economist, Nicky Weimar<\/figcaption><\/figure>\n\n\n\n

According to Nedbank’s economic unit, producer price inflation is expected to edge higher in the coming months, reaching around 4% by year-end.<\/p>\n\n\n\n

This is a similar trajectory seen for consumer inflation, with the PPI moving upward largely because of base effects. <\/p>\n\n\n\n

The group said that the main upward pressure will stem from food, particularly meat prices, which remain elevated due to the lingering impact of foot-and-mouth disease. <\/p>\n\n\n\n

However, this should be capped by higher field crop production supported by favourable weather. <\/p>\n\n\n\n

Fuel prices, which have been in deflation for a year, will also likely flip, the group said. In the short
term, however, subdued global demand and excess supply should keep global oil prices low. <\/p>\n\n\n\n

“On balance, PPI will remain relatively subdued, averaging around 2% in 2025,” it said.<\/p>\n\n\n\n

However, the real issues start creeping in from 2026 onward, the economists noted, warning that producer inflation will likely gain upward momentum due to persistent structural constraints and other operational costs.<\/p>\n\n\n\n

Chief among these is steep electicity price hikes, which will feed into all sectors of the economy.<\/p>\n\n\n\n

Energy regulator Nersa approved a 12.7% tariff hike for 2025\/26, and has now approved an 8% hike for the next two years after blundering its initial calculations on Eskom’s allowable clawback.<\/p>\n\n\n\n

These higher than expected price hikes will filter through various categories, lifting headline producer inflation to over 3% in 2026 and 2027, Nebank said.<\/p>\n\n\n\n

Consumers will suffer a double-blow from the hikes, having to take the direct hit from Eskom and municipalities hiking their prices, as well as through the higher prices of goods and services carried forward by producers and businesses.<\/p>\n\n\n\n

Nedbank noted that there are other risks at play that could push inflation higher, such as rand volatility and geopolitical conflicts\u2014particularly those in the Middle East, which could trigger oil price shocks.<\/p>\n","protected":false},"excerpt":{"rendered":"

Producer inflation in South Africa ticked higher than expected in August, with economists warning that more price pressure is coming in 2026 as higher electricity prices filter through.<\/p>\n","protected":false},"author":10,"featured_media":752333,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[1799,2247],"class_list":["post-838322","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-nedbank","tag-ppi"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/838322","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=838322"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/838322\/revisions"}],"predecessor-version":[{"id":838326,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/838322\/revisions\/838326"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/752333"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=838322"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=838322"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=838322"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}