Global| Oct 29 2003Producer Prices Weak and Weaker in Canada, South Africa
Summary
Producer price inflation is generally weak, and even weakening in some countries. Those reporting September data today, Canada and South Africa, both show outright declines year-on-year for September, that is, deflation in wholesale [...]
Producer price inflation is generally weak, and even weakening in some countries. Those reporting September data today, Canada and South Africa, both show outright declines year-on-year for September, that is, deflation in wholesale prices.
In Canada, this is the continuation of a trend that has run through the overall industrial price index since April and in the segment excluding petroleum and coal products since March. A pick-up in industrial price inflation that developed in the summer of 2002 has been erased as prices turned lower for electronics, transport equipment, machinery, metal products and some foods.
In South Africa, production prices accelerated rapidly throughout 2002, but have slowed progressively this year. Food and metals and metal products are the main sources of the slowdown. In addition, it appears that the South African PPI has responded to swings in the Rand currency. A nominal effective exchange rate compiled by the South African Reserve Bank had declined sharply from late 2001 through much of last year; it then turned significantly higher beginning in November 2002 and has climbed gradually but persistently since then, relieving upward pressure on import prices.US PPI data are shown in the table below for comparison. As noted here when the September data were released, food and energy prices lifted the total index, but the so-called "core rate" has changed very little. With Canada, it shares weakness in car and truck prices and machinery as restraints on wholesale price inflation.
| Percent Changes * | Year/Year Dec/Dec||||||
|---|---|---|---|---|---|---|
| Sept | Aug | July | 2002 | 2001 | 2000 | |
| Canada Industrial Prices, All Commodities | -2.6 | -1.9 | -1.6 | 2.8 | -2.4 | 3.5 |
| Canada Industrial Prices, excluding Petroleum & Coal Products | -2.9 | -2.4 | -2.0 | 1.8 | -0.3 | 1.6 |
| South Africa Production Price Index | -1.0 | 0.2 | 1.5 | 12.4 | 8.4 | 10.2 |
| US Producer Price Index, Total Finished Goods | 3.5 | 3.4 | 3.0 | 1.2 | -1.6 | 3.6 |
| US PPI, Finished Goods excluding Food & Energy | 0.1 | 0.4 | 0.2 | -0.5 | 0.9 | 1.3 |
Carol Stone, CBE
AuthorMore in Author Profile »Carol Stone, CBE came to Haver Analytics in 2003 following more than 35 years as a financial market economist at major Wall Street financial institutions, most especially Merrill Lynch and Nomura Securities. She has broad experience in analysis and forecasting of flow-of-funds accounts, the federal budget and Federal Reserve operations. At Nomura Securites, among other duties, she developed various indicator forecasting tools and edited a daily global publication produced in London and New York for readers in Tokyo. At Haver Analytics, Carol is a member of the Research Department, aiding database managers with research and documentation efforts, as well as posting commentary on select economic reports. In addition, she conducts Ways-of-the-World, a blog on economic issues for an Episcopal-Church-affiliated website, The Geranium Farm. During her career, Carol served as an officer of the Money Marketeers and the Downtown Economists Club. She has a PhD from NYU's Stern School of Business. She lives in Brooklyn, New York, and has a weekend home on Long Island.
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