If you imagine the economy as a bustling marketplace, then producer price inflation is like the cost of the raw materials that the vendors use to make their goods. In May 2025, this cost, or inflation, fell significantly to 10.2%, down from 18.5% in April. That’s an 8.3% shift, comparable to a grocer finding out that their fruit supplier has cut prices drastically.
This is not a one-off event but rather the fourth consecutive month where producer price inflation has declined. In fact, the rate of inflation is the lowest it has been since November 2023 when it was at 1.7%.
Looking at the monthly figures, we see that the average prices producers received for their goods and services also fell by 4.2% in May compared to April 2025. It’s as if the grocer’s customers are also paying less for their apples and bananas.
The recent decline in producer price inflation can be largely attributed to two sectors – Mining and Quarrying, and Manufacturing, contributing 10.6 and 9.5 percentage points respectively. Together, these sectors account for nearly 80% of producer price inflation. These sectors are essential for the country’s industrial growth and their lower costs present opportunities for stability, investment, and responsible spending.
Other sectors also saw significant changes. For example, in the services sector, the inflation rate fell from 5.9% in April to 1.7% in May. The manufacturing sector saw a decrease from 19.6% to 10.1%, and construction experienced a drop from 13.9% to 7.4%. However, not all sectors saw declines; the producer price for electricity and gas rose to 8.9% in May from 5.3% in April.
These changes provide businesses with the opportunity to reassess their cost structure and adjust their prices to stay competitive as input prices decline. It’s a good time for businesses to resume investments or expansion plans that were previously on hold, and to source more locally to reduce costs and minimize risks related to currency and imports.
Furthermore, it’s an ideal moment for businesses to engage with their financial partners to negotiate better loan terms due to the lower input inflation.
On the governmental side, strategic initiatives should be fast-tracked to boost exchange rate stability and import substitution. The government should also harness detailed sub-sector data to guide inflation control, industry, and trade policies, and strengthen public education on producer price inflation to promote transparency and informed decision-making.
For consumers, the current economic situation presents an opportunity to save more as prices are rising at a slower rate or even falling. Like a shopper finding a sale on their favorite items, it’s a chance to put a little more money back into their wallets.
