Consumer prices are set to inch higher in November, driven up by rising fuel prices as headline inflation remained elevated for the sixth consecutive month in October. Photo: Simphiwe Mbokazi
Consumer prices are set to inch higher in November, driven up by rising fuel prices as headline inflation remained elevated for the sixth consecutive month in October. Photo: Simphiwe Mbokazi

Consumer prices to inch higher in November on rising fuel prices in the country

By Siphelele Dludla Time of article published Nov 18, 2021

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CONSUMER prices are set to inch higher in November, driven up by rising fuel prices as headline inflation remained elevated for the sixth consecutive month in October.

Statistics South Africa (StatsSA) yesterday said the annual consumer price inflation was 5 percent in October, unchanged from the September reading.

On a monthly basis, consumer prices went up 0.2 percent, the same pace as in the prior month and matching market forecasts.

StatsSA’s chief director for price statistics, Patrick Kelly, said the upward pressure came mainly from transport, food and non-alcoholic beverages, housing and utilities, primarily electricity and other fuels. “Food and non-alcoholic beverages increased by 6.1 percent year-on-year, housing and utilities increased by 4 percent,” Kelly said.

“Transport increased by 10.9 percent year-on-year, and miscellaneous goods and services increased by 4.3 percent.”

This means that the October inflation print remained above the 4.5 percent midpoint of the South African Reserve Bank’s (SARB) monetary policy target range of 3 to 6 percent for six consecutive months.

FNB economist Koketso Mano projected headline inflation at 5.5 percent in November and still 4.5 percent on average for 2021.

“Inflation should be higher in November, with fuel inflation providing significant upward pressure after the R1.21 per litre price hike,” Mano said.

“Fuel price inflation remains a great source of near-term risk, with some analysts predicting prices breaching the R20 per litre mark by year-end given a weaker rand and elevated Brent crude oil prices.”

This risky inflation outlook could trigger the SARB’s Monetary Policy Committee to raise interest rates, at least by 25 basis points today, after more than a year in a bid to control rising prices.

Trade union Solidarity recommended that the interest rate be left unchanged and emphasised that the government should deregulate the fuel price.

“We need to put pressure on the government to comply with our demands to lower the fuel levy and to fully deregulate the price of fuel,” said Theuns du Buisson, economic researcher at Solidarity. “People must have enough money to go to work and buy food. Higher fuel prices are yet another regulation that is stifling our economy.”

Global oil prices have remained elevated on the back of supply and demand imbalances.

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BUSINESS REPORT ONLINE

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