INFLATION at South Africa’s factories, mines and farms was steady last month, confounding expectations for an increase and suggesting that consumer price pressures may be more benign than anticipated.

The producer price index (PPI) rose 5.2% compared with the same month last year — the same level as in October, and well below consensus estimates for a 5.4% increase.

Higher prices for mining and quarrying products and transport were counteracted by sharp decreases in the annual rate of change for petroleum and coal produts and chemicals and chemical products, Statistics South Africa said.

"We expect producer inflation to remain at current levels or marginally higher in the next few months," Nedbank said in a research note after the data were released. "The key short-term danger remains food prices, following the dry summer in the US. The weaker rand also poses a risk in early 2013."

These factors are likely to drive consumer inflation above its 3%-6% official target range early next year, making it difficult for the Reserve Bank to cut interest rates again if the economy stutters.

Consumer inflation rose 5.6% last month, also the same level as in October.

"We still do not expect the Bank to cut interest rates in 2013," Investec economist Annabel Bishop said.

The Bank unexpectedly trimmed its key repo rate by half a percentage point to 5% in July, citing the negative effects on South Africa of the global downturn.

During the month itself, PPI rose 0.3%, driven mainly by increases in agriculture prices, mining and quarrying products, and basic metals. These influences were partly offset by electricity prices, which dipped 0.1% during the month.