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- Statistics South Africa has updated the basket of goods that make up the producer price index.
- The PPI measures prices received by domestic producers for their products.
- Antidepressants, antacids and solar panels are in, while geysers and ball bearings have been dropped.
- For more financial news, go to the News24 Business front page.
The manufacturing of antidepressants, antacids and solar panels have evidently been enough of an influence on the SA economy to the extent that they make up three of the 12 new items being introduced to the basket of goods that make up the producer price index (PPI) from this year.
The PPI measures the selling prices received by domestic producers for their products. It is seen as an advanced indicator of where consumer inflation is heading.
Offal, highly processed sausages, prepared dishes and plastic car parts also made it into the basket, according to Statistics SA.
On the out were geysers, computers, communications equipment, ball bearings, car bodies and linen, to name a few of the 15 products that will no longer make up the PPI.
Interestingly, non-narcotic analgesics, which are pain meds that don’t lead to addiction, left the basket – and plain analgesics, which can contain the likes of opioids or alcohol or cannabis, were added.
This is not Stats SA saying that South Africans are depressed, stoned, anxious and unhealthy eaters who are tired of fumbling around in darkness. The agency carries out an objective large sample survey of the manufacturing industry, which involves tracking the price changes of locally produced goods. It covers four broad industries: manufacturing, water and electricity, mining and quarrying, and agriculture, forestry and fishing.
"Industry-level weights are updated each year based on the value added of each sector to the overall economy as recorded in the gross domestic product," Stats SA said in its release on Monday. "The most recent survey (2021) was published in 2023, and covers the financial years of producers ending between July 2020 and June 2021. The current PPI product weights originate from the 2017 large sample survey, released in 2019, and will apply up to the December 2023 reference month. The new weights are based on the 2021 large sample survey and will be introduced with effect from the January 2024 reference month."
Telling it like it was
So Stats SA is telling it like it was during some of the worst of the pandemic, and showing what was being manufactured more and what was being manufactured less to keep up with changing demand. The changes in the weights between sectors for both final manufactured goods and intermediate manufactured goods was marginal.
All five producer price indices will also be rebased so that the index level for December 2023 is equal to 100.
"Periodic rebasing of indices is good practice to remove the impact of historical index levels on aggregate indices. Rebasing when introducing new weights facilitates the creation of a continuous time series between the current and new sets of weights. Monthly and annual rates of change as reported prior to January 2024 are therefore unaffected by rebasing," Stats SA said.
It's due to publish SA’s January PPI data on Thursday. This will provide an insight into how price inflation at the manufacturing level fared in the first month of the year after annual consumer price inflation surprised to the upside last week.
It came in at 5.3% in January from 5.1% in December – moving further away from the central bank's preferred target of about 4.5% and potentially delaying any interest rate cuts.
