PRODUCER inflation was unchanged at 6,6% year on year in May compared to April, Statistics South Africa data showed on Thursday.

A consensus among 11 economists was that the producer price index (PPI), which reflects inflation in domestic output, would come in at 6,3%.

However, month on month, inflation quickened to 0,5% after prices rose 0,3% in April.

Exported inflation rose 5,3% on the year, and was up 1,1% on the month.

Imported inflation rose 8,3% on the year and was up 0,9% on the month.

Chris Hart, an Investment Solutions economist, said it was clear producer prices were in a downtrend, although this was higher than the market expected.

"I suspect the weaker rand this month has kept the PPI higher than expected. I think ultimately producer prices will come down because fuel and raw material prices are coming down, but higher maize prices could have an impact in the months to come," he said.

George Glynos, chief economist at ETM, said the reality was that PPI was probably going to drop in the months ahead.

"Given that it is still above the inflation target range, softening will be welcome by the Reserve Bank. It doesn't build enough of a case for an interest rate cut, but this number is certainly more positive than negative," he said.

With Reuters