South Africa's producer price index rose by 12.4 percent year-on-year in April from a revised 11.9 percent (11.8 percent) year-on-year in March, Statistics South Africa (Stats SA) data on Thursday showed.

The PPI rose 2.1 percent on a monthly basis after March's monthly increase of 2.0 percent.

PPI was expected to be at 11.7 percent year-on-year, a survey by I-Net Bridge has found. Forecasts ranged widely from 11.0 percent year-on-year to 13.1 percent year-on-year.

Stats SA attributed the rate in April to increases in the annual rate of change for mining and quarrying (18.8 percent to 21 percent), which now has a higher weighting in the new index series. Forestry increased from 5.4 percent to 14.2 percent, metal products went from seven percent to 12.3 percent, electricity from five percent to 11 percent, chemicals and chemical products from 8.7 percent to 10.5 percent, tobacco products from 6.6 percent to 10.1 percent and electrical, machinery and apparatus from 5.8 percent to 6.4 percent.

However, these increases were partially counteracted by decreases in the annual rates of change for products of petroleum and coal (37.2 percent to 33.6 percent), agricultural products (from 16.3 percent to 9.7 percent), gas and water (from 14.2 percent to 13.1 percent) and basic metals (-1.3 percent to –2.6 percent).

Exports were at six percent year-on-year from 8.3 percent in March.

Imports were at a whopping 21.2 percent year-on-year from 15.9 percent the month before.

The jump into double digits in October 2006 was the first double-digit increase since December 2002.

The annual average for PPI in 2007 was 10.0 percent from the 7.7 percent recorded in 2006. The annual average for PPI in 2005 was just 3.1 percent. PPI was at an average of 0.6 percent in 2004, 1.7 percent in 2003 and 14.2 percent in 2002.

The 2004 average was the lowest since 1959, when there was no change in producer prices. The lowest annual consumer inflation in the post-1945 period was also in 1959 at 1.1 percent.

New weightings were introduced in the January 2008 data, but with no backdating. The new weightings now also make it difficult to use PPI as a leading indicator of CPI.

Fanie Joubert, Efficient Group:

"It's above the market expectations, and it shows that the pressure continues to build on the producer side of the economy. That will eventually feed through to CPIX numbers.

"I think the debate during the next MPC meeting will be the size of a rate hike. I hope they don't go for 200-basis-points."

Russell Lamberti, ETM:

"PPI tends to be a stab in the dark as to where it's going to come in. Our forecast was for a lower figure.

"But this clearly shows that we may not have reached the peak in PPI yet. And it means that might have a rate hike of 100-basis-points at the next MPC meeting followed by another hike of 50 to 100-basis-points at the next meeting."

Chris Hart, Investment Solutions:

"PPI is on the wrong side of the trend. The trend is wrong, the level is wrong, and it is higher than expectations.

"This suggests inflation has not peaked and interest rates will still be moving up. We are probably looking at a hike in August as well before we can say we are done.

"Consumers are under pressure at the moment, and there is more pressure to come. The news flow will be negative for some time."

I-Net Bridge