PRODUCER inflation accelerated to 7.6% year on year in January, from 4.8% in December, amid rising food and equipment prices, Statistics SA data showed on Thursday.

Economists have warned that rising inflation will lead to more interest rate increases this year.

Food prices are rising as a drought has caused production shortages and necessitated imports, which are more expensive due to a weak rand.

Machines, metals and other equipment that SA needs to manufacture goods have also become more expensive to import due to the weak rand.

Stats SA said that the main contributors to the annual rate of 7.6% were food products, beverages and tobacco products, which contributed 2.8 percentage points.

The annual intermediate manufactured goods inflation accelerated to 3.8% from 1.6% in December.

The annual electricity and water inflation slowed to 11.6% in January compared with 14.1% in December.

The annual percentage change in the producer price index (PPI) for mining was 2.5% in January compared with -0.7%% in December.

The annual percentage change in the PPI for agriculture, forestry and fishing was 23.6%% compared with 11.8% in December on rising agricultural product prices due to the drought.