Inflation hits 5% for the second time in 2021

Inflation reached 5% for the second time this year in September 2021 with 5.0%, 0.2% up from 4.9% in August and 4.6% in July, representing the fifth consecutive month with annual inflation above the 4.5% midpoint of the South African Reserve Bank’s monetary policy target range.

According to Statistics SA, which released the figures for September on Wednesday, the slight increase was due to price increases in transport, while housing and utilities were the main drivers behind the 5.0% annual rate in September.

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Transport’s influence on the inflation rate

Annual transport inflation was significantly fuelled by fuel prices that increased by 19.9% over the past year. The price of inland 95-octane petrol reached an all-time high of R18.34 per litre in September 2021, taking a large chunk out of the budgets of consumers who were paying R15.18 per litre in September 2020 and R16.03 per litre in September 2019.

Consumers driving diesel-powered vehicles also suffered, with the average price for diesel at R17.18 per litre in September 2021, compared to R14.87 in September 2020 and R16.02 in September 2019. Annual fuel inflation has been consistently higher than overall headline inflation since April 2021.

According to estimates the fuel price increases in November will be even higher.

Public transport recorded a notable monthly increase in September with prices increasing by 2.1% in September 2021 compared to August 2021, mainly underpinned by car rental prices with a stiff monthly increase of 16.2%.

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Food and drink inflation

Monthly food and drink prices remain unchanged in September, the lowest monthly reading since August 2020, when the monthly rate was also 0%. Prices of fruit, vegetables, meat and fish decreased in September 2021 compared to August 2021.

Beef steak prices decreased by 1.3% and lamb/mutton was on average 0.6% cheaper. However, despite the monthly decline in prices, meat is still 10.3% more expensive than a year ago.

The picture changed a bit with the annual inflation rate for oils and fats that remained above 20%, with 22.4% for September 2021.

The average price for a 700ml bottle of sunflower oil was R30.98 in September, the highest price since Statistics SA started publishing data with the new inflation basket in January 2017.

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Other noticeable changes

Housing and utilities recorded an annual percentage change of 4.0%, on par with June 2020 when it was also 4,0%, still within the Reserve Bank’s monetary policy target range of 3%–6%. 

Another notable change was the annual inflation rate for restaurants and hotels at 3.2% in September, the highest since November 2019, when the rate was also 3.2%.

Pensioners are living with inflation of 4.9%, while the poorest households live with inflation of 6.6% and the most wealthy with 5.1%.