The price of goods made in South Africa climbed sharply last year, as the rapid fall in the value of the rand meant businesses had to pay more for their materials.

The gain of 14.1% in the producer price index for the 12 months to March is the biggest one-year rise since January 1991, according to Statistics South Africa.

It raises the spectre of a further rise in interest rates, which the Reserve Bank of South Africa has already lifted by 2 full percentage points this year to 11.5%.

Another full point is the probable result, economists said.

And it also seems inevitable that the rise in costs will be passed on to consumers, with retail inflation likely to break through 8% in the near future and a consequent knock-on effect on wage claims for this year.

Investigation

The problem for South Africa is the near-40% depreciation of the rand during 2001.

That meant big price rises for imported goods, up 16.7% on an annual basis, while domestic goods were up just 13%.

A government-appointed commission is currently examining allegations that securities dealers may have conspired to force the currency down.

Many observers believe that to be no more than scapegoating for broader economic problems - not least the reputational damage done to Southern Africa by the behaviour of President Robert Mugabe in Zimbabwe.

The rand has been strengthening again in recent weeks, and as a result the rate of increase in producer prices is falling.

The month-on-month rise from February to March was 1.1%. The month before had been 1.9%.