The producer price index (PPI) rose to 11.2% year-on-year in February from 10.4% in January. This follows the increase in the CPIX to 9.4%. If any further sign was needed to almost make certain that interest rates are going to go up next month, todays PPI figures are reason enough.

The PPI rose 1.3% on a monthly basis after January’s monthly increase of 1.0%. Economists had forecasted the PPI to increase to between 10.4% and 11.1% but it looks like they were slightly off and the figure came in higher than they had expected. And all this before the proposed increase in electricity tariffs by 14% by Eskom. Chances are that the PPI will increase over the next couple of months fuelled by the electricity price hike. We could easily be seeing PPI being close to 15% quite soon. Worse still if Eskom get the go-ahead to increase tariffs by 53%, who knows where the rate of inflation could end up?

All eyes will be on the Central Bank governor, Tito Mboweni, on the 9th and 10th of April when the MPC (Monetary Policy Committee) meet to decide on what will happen to the interest rates. By the look of things, they may not have much of a choice but to increase the interest rates.

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