Consumer prices in South Africa fell slightly in August due to softening fuel prices as the global oil prices eased, though food inflation continued upwards.
Data from Statistics South Africa (Stats SA) today showed that the annual consumer inflation edged lower to 7.6% in August from 7.8% in July.
However, though the consumer price index (CPI) has moderated this August inflation print remains above market expectations of 7.5% and the upper limit of the South African Reserve Bank’s target range of 3%-6%.
Stats SA said that fuel prices decreased by 3.8% between July and August, with petrol falling by 5% and diesel by 0.9%, pushing the annual rate for fuel down to 43.2% from 56.2% in July.
Stats SA chief director for price statistics Patrick Kelly said the welcome decrease in the cost of fuel had an impact on the overall transport index, which declined by 1% between July and August.
“In contrast to fuel, food inflation continued upwards. Annual food and non-alcoholic beverages inflation has climbed significantly from the recent low of 6% in April this year and has remained above 5% since October 2020,” Kelly said.
Nine of the eleven food and NAB categories recorded an annual inflation rate above 8,0% in August.
“Among these, bread and cereals registered the highest monthly increase, rising by 3.1% between July and August.
“Oils and fats hit another annual high, 37,6% in August, up from 36,2% in July. The monthly rate, however, has slowed from its peak of 10,1% in May this year to 1.1% in August.
“Hot beverage prices steamed to their highest annual rate in 64 months at 11.8%, stirred up by monthly increases in rooibos tea and instant coffee.
“Household cleaning products (detergents) recorded significant price increases. Overall, the price index for cleaning and maintenance products increased by 23.4% over the past 12 months.”
On a monthly basis, the CPI inched up by 0.2%, the lowest reading since January 2022 when it was also 0.2% while the core inflation dropped to 4.4% from 4.6% year-on-year.
Investec chief economist Annabel Bishop said inflation had peaked in July as expected as September’s CPI inflation reading was also expected to be below July’s.
“However, the SARB is still expected to hike interest rates by 75 basis points tomorrow, as the Federal Open Markets Committee (FOMC) does the same tonight, with one month’s dip in some inflation pressures unlikely for either central banks to call an end to their upwards interest rate hiking cycles yet,” Bishop said.
“Both the SARB and the FOMC are seeking to get their targeted measures of inflation back to 4.5% and 2.0% year-on-year, respectively, with South Africa’s inflation figures today not sufficient to show a downwards trend which is what will be needed to eventually halt rate hikes.”
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