Inflation decreases by almost one percentage point in June

Inflation decreased by almost one percentage point in June to 5.4% from 6.3% in May, the lowest since October 2021 and below the upper limit of the South African Reserve Bank’s monetary policy target range.

The last time inflation was below 6% was in April 2022. The 0.9 of a percentage point drop in headline inflation between May and June is the largest decline since May 2020, when the rate also declined by 0.9 of a percentage point.

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According to Statistics SA, annual inflation dropped in six of the 12 main categories covered by the consumer price index, while one remained unchanged and five recorded increases. Annual goods inflation dropped to 6.3% in June from 8.0% in May and services inflation was slightly lower at 4.5% in June compared to 4.6% in May.

Food inflation

Annual inflation for food and non-alcoholic beverages slowed for the third successive month to 11.0% from a high of 14.0% in March when it was the highest in 14 years. Statistics SA says most food and non-alcoholic beverages components recorded lower inflation rates in June, with the exception of vegetables and fruit, as well as sugar, sweets and desserts.

Annual inflation for sugar, sweets and desserts increased from 11.9% to 16.4%, the highest for this category since June 2017. Statistics SA says notable annual price increases were recorded for brown sugar, that increased by 17.4%, white sugar, that increased by 17.1% and chocolate slabs, that increased by 16.2%.

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The prices of oils and fats decreased for the tenth month in a row, with the index declining by 9.5% in the 12 months to June. The average price of a 750 ml bottle of sunflower oil was R35.57 in June 2023 compared to the R43.97 it cost in June 2022.

The annual inflation rate for alcoholic beverages and tobacco increased to 6.1% from 5.9% in May, with the price of wine increasing to 9.4% from May’s reading of 9.1% and beer costing 5.5% more compared to 4.7% the previous month.

Transport inflation

Annual transport inflation was one of the stars in June, decreasing from 7.0% in May to 1.8% in June, mainly thanks to lower fuel prices. The fuel index declined by 8.3% in June 2023 compared to June 2022, while the monthly change was -3.1%.

The consumer price index for June incorporates the most recent quarterly survey of housing rent as well, recording an annual increase of 2.7%, slightly higher than the 2.5% in March. The annual rate for imputed rent (what homeowners would pay for a housing unit equivalent to the one they own) was 2.9%, up from 2.7% in March.

Imputed rent increased by 1.2% between March 2023 and June 2023 on a quarterly basis, the largest quarterly increase since September 2018, when the rate was also 1.2%.

Products that became more expensive over the past year between June 2022 and June 2023, are onions (64.5%), carrots (26.7%), potatoes (26.1%), samp (24.8%), bacon (24.7%), tomato sauce (24.1%), instant noodles (23.1%), ice cream (22.9%), cheese spread (22.5%) and maize meal (22.3%).

The largest price increases between May and June were for the prices of books (9.1%, white sugar (7.2%), brown sugar (6.8%), onions (5.1%), fresh cream (5.0%), vinegar (4.9%), instant noodles (4.8%), instant yeast (4.4%), air transport (3.9%) and frozen fish fingers (3.8%).