South Africa's producer price index (PPI) registered deflation of -3.7 percent year-on-year (y/y) in September from -4.0 percent y/y in August, Statistics South Africa (Stats SA) data on Thursday showed.

The PPI decreased 3.2 percent on a monthly basis after August's monthly increase of 0.3 percent.

The PPI was expected to have decreased at 2.8 percent y/y according to a survey of 11 leading economists by I-Net Bridge, with forecasts ranging from -3.8 percent to -1.0 percent y/y.

Efficient Group economist Freddie Mitchell said: "It is much lower than analysts had expected. It indicates we are in a contractionary trend and means there is no scope for a further rates cut."

Standard Bank senior economist Danelee van Dyk said the figures were lower than expected. "We expected deflation was going to become less pronounced than in the last few months. The large part is these prices are still affected to an extent by rand strength," she said.

KADD Capital economist Elize Kruger noted that the follow-though from producer prices to consumer prices "has been vague in recent months" said she did not expect these developments to impact on consumer prices in the near future.