For April, South Africa’s producer inflation reached 3%, a 172.7% jump from 1.1% the previous month, owing to the conflict in the Gulf region.
Specifically, the inflation surge was a result of higher fertilizer and energy costs tied to America’s conflict with Iran.
Tensions involving Iran and the closure of the Strait of Hormuz, a critical oil shipping route, have sent shockwaves through global supply chains.
The strait is also an important supply route for liquefied natural gas, oil, and about a third of the nitrogen fertiliser trade.
Data from Pretoria-based Statistics South Africa revealed that the inflation spike is the largest seen since 2012.
A Bloomberg survey of five analysts yielded a median forecast of 2.8%.
In April, the annual rate reached a two-year high, rising to 4.8% from 2.3% the preceding month.
The coke, petroleum, chemicals, rubber, and plastic products sectors primarily drove this increase in both annual and monthly rates.
Governor Lesetja Kganyago warned that there has already been “one global inflation surge this decade, and we may well be starting another.”
In such situations, central banks must maintain their credibility and prevent inflation from becoming entrenched, he said.
South Africa’s struggles resulting from Iran’s war
Before the end of March, reports showed that over 140 petrol stations struggled to meet demand ahead of record price hikes in April.
According to industry figures, 143 service stations ran out of diesel and 136 were dry of petrol as motorists rushed to fill up ahead of expected price hikes.
By April, Bloomberg’s analysis revealed that Johannesburg’s benchmark stock index was on track for its worst month in nearly two decades, as the war in Iran dampened demand for emerging-market assets.
The precious metals and mining sector, which accounts for almost a quarter of the index, has fallen 27% since the Middle East crisis began, wiping out the year’s previous gains as gold and platinum prices collapsed.
