Seifsa raises concerns over inflation uptick

The Steel and Engineering Industries Federation of Southern Africa (Seifsa) has expressed concern at the latest Consumer Price Index (CPI) figures, which indicate that inflation increased further in November 2018, despite the decision by the South African Reserve Bank to raise the repurchase rate by 25 basis point to 6.75% last month in an effort to  contain inflation within the mid-point of its 3-6% target band.


The CPI figures released by Statistics South Africa (StatsSA) yesterday indicate that the annual consumer price inflation increased to 5.2% in November, from 5.1% in October. Seifsa economist Marique Kruger said given that the demand for the Metals and Engineering (M&E) cluster’s intermediate products was a derived one based on consumer spending, the persistent rise in inflation was cause for concern.

However, Kruger said the increase in the CPI was expected going into the festive season, underpinned by a seasonal pattern of higher consumer spending, galloping November fuel prices and a generally upward-trending Producer Price Index (PPI) for both the intermediate and final manufactured goods. “The concern is that the increasing trend in inflation is likely to continue in the near term, compelling consumers to cut back on spending for final manufactured goods which warrant the use of intermediate manufactured products of the M&E cluster of industries as inputs,” she said.

“The latest inflation data is disappointing and does not augur well for businesses in the M&E cluster of industries and the broader manufacturing sector. The concern is that companies will continue to face headwinds, including higher interest rates, operational expenses and inflationary intermediate inputs costs,” Kruger said.

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