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The Producer Price Index (PPI) surged 4.4% month-on-month from May to June, Statistics SA data showed yesterday. From last year, the PPI climbed 6.6% in June, the same rate of increase as in May. Consensus economists expected an increase of 5.9%.
A breakdown of the PPI showed grain prices climbed by 15,9% year on year, nearly double the 8,9% rise during May. That helped to push the rise in producer food prices up to 4,4%, from 2,3% during May, reports Business Day.
Couple this with the 12% increase of money supply since May 2011, that is now beginning to work its way through to the consumer sectors, and you have an inflation cocktail that will be served in 2013.
Last week’s rate cut by the Reserve Bank was a loonie decision that will come back to bite them.