Rising food, beverage prices put consumer inflation at 7-month high
JOHANNESBURG - SOUTH Africans paid a little more for their goods and services in October as consumer inflation rose to a seven-month high, driven largely by rising prices for food and non-alcoholic beverages.
Data from Statistics South Africa (StatsSA) yesterday showed that headline inflation ticked up slightly to 3.3 percent in October, the biggest annual rise since March when the rate was 4.1 percent.
The consumer price index (CPI) rose by 0.3 percent month-on-month from 3 percent in September.
StatsSA said all food categories recorded above-headline increases, with the exception of bread and cereals. However, inflation remained at the lower end of the South African Reserve Bank (SARB) target band of 3 to 6 percent despite slightly rising prices as the economy slowly recovers from the Covid-19 impact.
StatsSA said that the large annual increases were recorded for fruit, oils and fats, sugar sweetened desserts, and eggs, milk and cheese.
Tea was the main driver behind the rise in hot beverage prices as black tea prices jumped by 3.9 percent compared with September.
StatsSA’s chief director for price statistics Patrick Kelly said this October inflation figure was the biggest annual rise since the first full month of lockdown in April.
Kelly said in most of these cases there had been large increases in producer prices over the last few months.
“Prices in the food and non-alcoholic beverages category jumped by 1.4 percent on average between September and October, leading to a 5.4 percent annual increase,” Kelly said. “This is the biggest annual rise for this category since September 2017, when the country was emerging out of severe drought.”
The SARB’s monetary policy committee last week forecast headline consumer price inflation to moderate at 3.2 percent in 2020 as the Covid-19 lockdown weakened demand.
SARB said inflation would be slightly lower than previously forecast at 3.9 percent in 2021 and remain at 4.4 percent in 2022, still below the midpoint of the target band.
PPS Investments’ Reza Hendrickse said inflation was expected to rise moderately going forward.
“The lower oil price and stronger rand in recent months have contributed to lower inflation, but weak economic growth has also kept a lid on inflationary pressures,” Hendrickse said.
StatsSA said transport prices fell 0.5 percent in October after rising 0.3 percent in September.
Investec’s Kamilla Kaplan said the decline in the fuel price contributed to October’s headline inflation.
Fuel price deflation is also expected to have had a meaningful influence on producer price inflation, which is forecast to have remained steady at 2.5 percent in October.
“A dampening effect on the headline outcome stemmed from the 32 cents per litre and 93c per litre cuts in the petrol and diesel prices respectively in October,” Kaplan said.
“This translated to an accelerated rate of fuel price deflation of -9.1 percent year-on-year compared to - 6.2 percent year- on- year in September.”