Talking Points:
- PPI slows to 6.5% in November
- Composite Leading Business Cycle Indicator Decreased 0.5% in October
- USDZAR remains supported above old resistance at 11.3800
Plagued by mixed results throughout the month of December, South Africa’s latest price level and business cycle releases remain on par. Continuing its deceleration in November, the annual percentage change for PPI fell to 6.5%, thereby assisting in the decline of CPI to 5.8 %—below the SARB’s 6% ceiling. However, in opposition to this positive development, South Africa’s leading indicator declined, due to further reductions in the export commodity price index.
Since first dropping below the 6% ceiling in September, South Africa’s CPI has continued to contract. In a similar fashion, PPI fell 0.16 pp on a monthly basis in November. As the main component contributing to the deceleration, mining decreased by 1.7% when measured year-over-year. Within the mining sector, the greatest negative impact came from a decline in the price of gold and other metal ores (-5.9%) as well as coal and gas (-2.6%). However, despite a reduction in inflationary pressures, confidence in the economic outlook has declined.
On a month-to-month basis the leading indicator decreased by 0.5%. Of the 11 components reviewed, 6 fell victim to a decrease while the other 5 only marginally increased. Down to 99.9 from 110.4, the index was most affected by a reduction in the value of exports relative to imports as well as a deceleration in M1.
In a December 18th release, Statistics South Africa reported an annual increase of 5.1% in the value of exported units—well below the 9.2% increase in the value of imported commodities. If gold, or ores and minerals had been excluded the value of exports would have been substantially higher measuring 5.6% or 6.7% respectively.
USD/ZAR Daily Chart

Chart Created by Walker England Using MarketScope2.0