No stopping steel
After estimating in April that steel was only 12percent more expensive than a year ago despite ArcelorMittal's relentless price hikes, a proper check of metal prices in May caused Statistics South Africa to ramp its annual steel inflation figure more than sixfold to 76percent.
This sent steel rocketing past "fertiliser and pesticide" as the highest inflation item in Statistics SA's producer price index (PPI) basket.
Stats SA prefaced yesterday's PPI report with an explanation that the jump from the 2,3percent month-on-month steel inflation it reported in April to 64percent in May is due to it surveying metal prices only once a quarter.
ArcelorMittal's actual steel price increases were about 18percent in May, marking its fourth hike this year.
Correcting its steel price data caused Stats SA's overall PPI figure to leap nearly five percent to 16,4percent.
Carmen Altenkirch, an economist at Nedbank, said: "Although the sharp rise in producer inflation is bad news, the reason for the increase is easy to isolate - steel prices, which are unlikely to have a direct impact on consumer inflation."
Overall food prices at the farm gate dropped 6,3percent month-on-month in May, rolling produce prices back to what they were a year ago.
But consumers have not seen these lower prices yet. May's data continues a trend where food manufacturers are paying farmers lower prices while charging retailers higher prices.
At manufacturing level, food inflation was 1,7percent month-on-month and 19percent year-on-year.
Danelee van Dyk, an economist at Standard Bank, said: "The moderation in food prices at the agricultural level bodes well for the outlook for food prices in general, but optimism over substantial relief should be kept contained."
The US's flooded cornfields have already caused local maize prices to breach R2155 a ton, a four-year peak.
This, along with soaring diesel and fertiliser prices, will see agricultural food prices rising again in coming data.
"South Africa is undoubtedly gridlocked in a current of inflationary pressures which necessitates further monetary policy tightening. We anticipate the Reserve Bank to increase the repo rate by another 50 basis points in August," Van Dyk said.