Statistics SA said the producer price index (PPI) - which leads consumer inflation - increased by an annual rate of 4,5% after climbing by 4,2% in October and above market expectations of a 4,1% rise.

On a monthly basis, PPI rose by 0,5% in November after increasing by 0,1% in October. A Reuters poll had forecast PPI by 0,2% during the month.

"The spike in producer inflation was essentially a food price story. Given its weight in the consumer inflation basket, such increases in food inflation at the producer level will have to be closely watched," said Adenaan Hardien, economist at African Harvest.

"To the extent that food prices are identified as a key risk to the inflation outlook, such increases will be a cause for concern. Today’s numbers would have dampened some of the rate optimism from yesterday’s CPI release.’

Government bonds weakened, with the yield on the most traded R153 bond due 2010 up 9 basis points at 7.42%.

A sharp slowdown in October’s consumer inflation numbers in data released on Wednesday had sparked speculation that the Reserve Bank could cut interest rates next year.

The targeted CPIX inflation measure rose by 3,7% in the year to November from 4,4% in October — well below market forecasts for a 3,9% rise.

The Reserve Bank left its repo rate unchanged at 7% last week, saying that the inflation outlook had improved since the last monetary policy committee meeting.