Inflation creeps up for the second month in December

Inflation crept up by another 0.1% in December, rising to 3% from 2.9% in November, in line with economists warning that the significant decrease of 1% in October will not be sustained and that inflation will start to increase again.

According to Statistics SA, which released the figure for December on Wednesday, the main contributors to the 3% annual inflation rate were:

• housing and utilities that increased by 4.4% and contributed 1 percentage point;
• miscellaneous goods and services that increased by 6.6% and contributed 1 percentage point;
• food and non-alcoholic beverages that increased by 2.5% and contributed 0.5 of a percentage point; and
• alcoholic beverages and tobacco that increased by 4.3% and contributed 0.3 of a percentage point.

In December, the annual inflation rate for goods was 1.9%, up from 1.6% in November, while services were 4.2%, down from 4.3% in November.

Statistics SA says the average annual consumer price inflation for 2024 was 4.4%, the average CPI for all urban areas compared to 2023. This was 1.6 percentage points lower than the corresponding average of 6.0% in 2023.

ALSO READ: Inflation stays low but expected to increase over coming months

Meat prices lowest since November 2019

Meat prices were 0.4% lower than in December 2023, which was also lower than the 0.1% in November. It was the lowest annual change for meat since November 2019 when it was 0.9%.

However, despite the annual deflation, meat prices increased month-on-month by 0.5%. Individually quick frozen chicken portions, the highest weighted meat item, increased in price by 2.2% month-on-month, while the price of stewing beef, the second highest weighted meat item, increased by 2.7%.

Consumers had to really dig deep in their wallets to afford coffee in December, with the hot beverages category increasing by 13.5% compared to 13.1% in November. Instant coffee cost 16.1% more in December compared to December 2023.

A number of wheat-based products showed a monthly decline, with brown bread costing 0.6% less than in December, while macaroni cost 0.7% less and cake flour 1.1% less, although instant noodles cost 2.2 more.

This graph shows food and beverage products that registered notable price changes in December:

ALSO READ: Inflation changes SA’s coffee preferences: Here’s what Mzansi is drinking

Housing and utilities inflation down in fourth quarter

Housing rents are measured every quarter and showed an annual increase of 2.8% in the fourth quarter, down from 3.3% in the third quarter, wile equivalent rent inflation decreased to 2.4% from 2.9% in the third quarter.

These decreases pulled the inflation rate for housing and utilities down to 4.4% in the fourth quarter from 4.7% in the third quarter.

Domestic worker wages, also measured quarterly, recorded an annual increase of 4% in the fourth quarter of 2024, down from 4.1% in the third quarter of 2024.

Vehicle inflation also showed a steep decline in inflation

Vehicle inflation dropped steeply during 2024 after starting the year at 7.2%. Used cars were on average cheaper than a a year ago, with an annual decline of 0.6% in December. Although fuel prices increase by 1.1% month-on-month, fuel price inflation was 10.2% lower than in December 2023.

ALSO READ: Reserve Bank governor wants lower inflation target

Big decrease in inflation for restaurants and hotels

Inflation for restaurants and hotels dropped to 4.2% in December from 5.9% in November, largely due to hotel room rates dropping to 4.2% compared to November, pulling the annual change for hotels down to 1.9% in December from 7.6% in November.