Metals & engineering sector suffers amid further declines in selling price inflation
29 Nov 2019 - by
Companies operating in the metals and engineering (M&E) sectors have been hit with a further setback following the decline in the selling price inflation for October according to the Steel and Engineering Industries Federation of Southern Africa (Seifsa). The latest data coming from Stats SA points to a 0.6% decline in the producer price index (ppi) for intermediate manufactured goods, signifying difficulties in maximising gains from selling prices for these goods.
Commenting on the situation, economist, Marique Kruger said the prevailing economic challenges, coupled with rising logistics and energy costs had driven the industry down.
“Generally, the mounting pressure of input costs on businesses is disconcerting, especially given the current challenging economic environment characterised by weak domestic demand, increasing logistics and energy costs, and declining employment numbers,” said Kruger.
“As a result, local companies are compelled to review their individual cost curves in order to stay afloat, and the further dip in selling price inflation starves businesses of an opportunity to enhance sustainability.”
In conclusion, Kruger added that the decrease in the PPI for intermediate manufactured goods had posed more challenges to producers in the M&E industry, while manufacturers had increasingly found it difficult to pass cost increases on to the market to help balance input costs, inflation and selling price inflation.