South Africa's producer price inflation (PPI) slowed to 2,9% in April, down from the 5,3% in March, Statistics South Africa (Stats SA) reported on Thursday.

The annual rate of change in the PPI for exported commodities declined to -2,7% in April, compared with the 0% recorded the year before.

Stats SA added that the annual rate of change in the PPI for imported commodities declined to -14,7% in April, compared with the -10,1% in April 2008.

Investec economist Annabel Bishop noted in a statement that the falling prices of agricultural products; non-electrical machinery and equipment; and petroleum and chemical products, had driven the PPI down.

She added that imported inflation at the producer level had dropped to -2,7%, from a high of 24,6% in 2008, which, along with the drop off in demand from the domestic recession, subdued production costs.

"This recessionary pricing will see PPI deflation being recorded in the next couple of months in South Africa and aid Consumer Price Inflation (CPI) to regain its target by the end of the third quarter of 2009," she highlighted.

Further, she commented that while Investec was still expecting a 100 basis point cut in interest rates to be announced on Thursday afternoon, a 150 basis point cut was also likely, given the depth of South Africa's recession and the advent of PPI deflation from May.

Stats SA on Tuesday confirmed that South Africa was indeed in a recession, with a 6,4% contraction in gross domestic product.