Cape Town - The Consumer Price Index (CPI) retreated to 4.0% in July from 4.5% in June.
This is the lowest CPI headline rate since January, when it was also 4.0%. A fall in fuel prices and a rise in municipal tariffs were said to the main price drivers during July.
The purpose of the CPI survey is to collect and provide information regarding changes in the overall level of prices of all goods and services bought by the average household.
On Wednesday, the chief director for price statistics at Statistics SA, Patrick Kelly provided a overview of the latest inflation figures.
“A fall in fuel prices and a rise in municipal tariffs were the key price movers during the month,” he said.
Mayoral committee member for economic opportunities and asset management James Vos said the City of Cape Town Council had limited levers to deal with inflation directly.
Vos said as a macroeconomic variable, inflation was best dealt with at a national level with appropriate monetary or trade policy, which was outside of the ambit of the city council.
“Where possible, the city does try and keep its service charges as affordable as possible while at the same time endeavouring to keep service provision reliable. For instance, although Eskom’s tariff increase is 15.6% (and 65% of the city’s tariff goes towards bulk purchases from Eskom), the city managed to keep its electricity increase for the year at almost half that of Eskom’s increase,” Vos said.
Mayoral committee member for economic opportunities and asset management James Vos said the City of Cape Town Council had limited levers to deal with inflation directly. Picture: Phando Jikelo/African News Agency
Deputy president of the Cape Chamber of Commerce and Industry Jacques Moolman said the biggest
factor in recent months was the exchange rate.
“The rand has lost a lot of its buying power and that makes things, especially imported items such as petrol, more expensive. And this contributes to inflation,” he said.
“We also have very high water tariffs as well as other municipal charges.”
He said one of the ways in which Cape Town benefited from the weak rand was that it made the city more attractive as a tourist destination, which in turn boosted local business.
“Unfortunately, it also means that some of us could find ourselves paying tourist prices for entertainment and at restaurants,” he said.
Moolman said another factor was the varying price of petrol.
“In the last couple of months, the price of crude oil has come down significantly, but is now increasing again and we will feel the effect in a few months’ time.
“There is usually a three-month lag before we feel the effect so there is unlikely to be relief any time soon.”
Kelly said most municipalities increased their tariffs annually, with effect from July.
“Household utility payments, which include municipal rates, electricity and water bills, contribute 6.9% of total household spending in South Africa’s CPI. Electricity tariffs increased by 10.5% in July 2019, higher than last year’s increase of 6.8%.
“Water tariffs rose by 10.3%, slightly lower than the 11.8% rise recorded in 2018. Municipal rates were up by 6.3%, lower than 2018’s 14.8%.”
Kelly said food and non-alcoholic beverage inflation was 3.4% in July, down from June’s 3.7%.
However, prices for bread and cereal products continued to climb, registering a rise of 7.9%.
“This was slightly higher than June’s 7.3%. Meat prices increased by 0.2% annually compared with 0.3% recorded in June.”