Publications
Partners
Consumer price inflation (CPI) has hit a 14-month high, rising to 4.4% last month from 3.2% in March, Statistics SA reported on Wednesday. This is the highest reading since the lockdown was implemented more than a year ago.
Statistician-General Risenga Maluleke said the main contributors to the rise were food and non-alcoholic beverages, housing and utilities, transport and miscellaneous goods and services.
“Food and non-alcoholic beverages increased by 6.3% year-on-year, and contributed 1.1 percentage points, the highest it has been in 45 months. Annual meat inflation accelerated to 7.1% last month from 6.7% in March.”
Maluleke said this was the sixth consecutive month that the rate was recorded above 6%.
“Other specific products recording significant increases last month include the hiking of chicken portions at 6.3% and stewing beef at 12.1%. Cooking oil prices rose by 21.6% over the past 12 months,” he said.
Maluleke said at the time, parts of South Africa were experiencing severe drought.
READ: Economists say MPC should keep rates unchanged as SA remains in an economic crisis
According to Agribiz, while food price inflation has experienced some upward pressure since the turn of the year, South Africa could see food price inflation decelerating somewhat in the second quarter of this year. Agribiz said the expected deceleration in food prices will be primarily underpinned by grain-related products.
Another cause for the increase in last month’s inflation was the 2.3% year-on-year increase on housing and utilities which contributed 0.6 of a percentage point, said Maluleke.
Transport was another cause for higher inflation. He said transport increased by 10.6% year-on-year, up from 3.8% from last month, and contributed 1.5 percentage points to inflation. This was mainly due to a rise in food prices, public transport and on new vehicles.
Fuel prices reached their highest level on record. Inland 95 octane petrol cost R17.32/l last month, R1 higher per litre than in the previous month. He added that the annual inflation rate for fuel was 21.4% last month, with a month rise of 5.4%.
Maluleke said public transport fares also increased by 5.1% last month compared to the previous year. New vehicle prices rose by 5.5% over the same period while miscellaneous goods and services increased by 4% year-on-year and contributed 0.7 of a percentage point.
The new inflation figures are in line with market expectations.
Annabel Bishop, the chief economist at Investec, said it was anticipating headline CPI to reach an average of 4.2% this year and increase to an average of 5% next year, above the mid-point of the Reserve Bank’s inflation targeting band of 3% to 6%.
Bishop said headline CPI inflation in South Africa was largely driven by the housing and utilities category such as electricity and water, municipal rates and taxes and other housing costs.
“This makes up just under 25% of the index, and this will likely remain the case over the next several years,” she said.
According to Investec, market expectations of a global recovery “as well as Organisation of the Petroleum Exporting Countries’ aggressive quotas,” have supported the rebound in oil prices from lows last seen in the second quarter of last year.
Investec said fuel price inflation, which aided the suppression of the headline inflation rate for most of last year, has moved out of deflationary territory.
“But markets have since seen four consecutive months of marked fuel price hikes adding pressure to inflation,” Bishop said.
She added that the risk on inflation was also supported by a lift in demand as the global recovery gains momentum.
| ||||||||||||||||||||||||||||||
 |
