Producer electricity costs climb 30% in June as winter tariffs kick in

The average cost of electricity for South African producers jumped by more than 30% in June as winter tariffs set in. 

The producer price index is a weighted index of prices that businesses charge at the wholesale or producer level for final manufactured goods. 

Stats SA surveys the relative prices of good and services that drive production costs. The cost of water and electricity for producers jumped by 32% between May and June this year. 

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Speaking to Fin24 by phone, Stats SA principal survey statistician Andrew Rankhumise explained that the reason for the jump was that winter tariffs had come into effect for producers. Eskom has not yet responded to a Fin24 query. 

The National Energy Regulator of South Africa approved a 13.87% average price for its direct customers which was implemented from April 1, 2019.

A 15.63% average price increase for municipalities, which mainly affects consumers, was implemented from July 1.

• READ: Producer price inflation slows slightly to 5.8% for June
  

Based on a graph supplied by Stats SA, the index for electricity always spikes in June, sometimes as much as 40%, Rankhumise said.

The highest the index has spiked in the past eight years is 52.26%, which was recorded in 2012.

Conversely, electricity prices for producers generally dips in September. The highest decline was recorded in 2012, when the index for electricity dropped by 32.92%.

Despite the increase in electricity prices for producers, headline annual producer price inflation for June - at 5.8% - was down from 6.4% in May.