SA’s inflation lower again in June, as expected

Statistics SA (Stats SA) has announced that annual consumer inflation eased to 4.9% in June, after reaching a 30-month high of 5.2% in May. The monthly increase in the consumer price index (CPI) was 0.2%, up from 0.1% in May, but lower than the 0.5% increase recorded from May to June 2020.

Without food, non-alcoholic drinks and fuel, annual consumer inflation is 3.4% in June, well below the 4.9% headline rate. This indicates that food, non-alcoholic drinks and fuel are the drivers of inflation.

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Double-digits for fuel

Fuel recorded double-digit inflation for the third month in a row with prices increasing by 27.5% in June compared to June last year. However, this is lower than the increase in May of 37.4%, but higher than the April reading of 21.4%, but consumers must remember that these relatively high rates come off a low base recorded during the second quarter of 2020 when fuel prices were low.

The price of inland 95-octane petrol dropped very quickly during the Covid-19 lockdown last year, with the price slumping to R12.22 per litre in May 2020, the lowest reading since September 2016 when it was R12.17. The price rebounded in June 2020 to R13.40, before eventually rising to R17.32 in April 2021 and falling slightly to R17.13 per litre in June 2021.

Fuel prices dropped by 0.2% between May and June 2021 on a month-to-month basis, with the price of inland 95-octane petrol edging lower by 10c a litre. Diesel prices, on the other hand, increased by an average of 0.7%. It recorded an annual increase of 25.5% in June, lagging behind the increase of 28.2% in the petrol price. The average price for a litre of diesel in June was R16.31 per litre.

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Oils and fats

According to Stats SA, annual food and non-alcoholic drinks were unchanged since May, remaining steady at 6.7% in June, with an average price increase of 0.2% between May and June 2021. Oils and fats were one of the three food groups that registered the highest annual increases in June. The other two groups were meat and sugar, sweets and desserts.

Cooking oil products have recorded sharp increases. While the average price of a 750ml of sunflower oil was R20.99 In June 2020, it increased to R29.45 in June 2021. Oils and fats increased steadily since February 2019 until now with an annual increase of 21.6%.

Meat inflation also continued to accelerate and reached an annual rate of 8.6% from a 12-month low of 4.1% in August 2020. Lamb prices increased by 10.9%, stewing beef by 16.7% and pork by 10.5%. The sugar, sweets and desserts index rose by an annual rate of 7.2% in June 2021, lower than the 8,7% recorded in May 2021. This category has seen price rises slowing down from a high of 9.7% in October 2020.

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Accommodation inflation also higher

Stats SA records housing rentals every quarter, which makes up a sizeable chunk (17%) of the inflation basket. It includes actual and imputed rentals. In June actual rentals increased by 0.4% and imputed rentals by 0.6% while both kinds of rentals dropped by 0.2%, in March 2021 after increasing by only 0.1% in June 2020.

While actual rentals increased for houses (+0.5%) and townhouses (+0.3%) in June 2021, rentals for flats declined by a marginal 0.1%.