SA’s inflation rate up after two months of decreasing

The inflation rate is up after two months of decreasing, with annual consumer price inflation increasing to 4.9% in August 2021 from 4.6% in July and identical to the one in June.

According to Statistics SA, this is the fourth consecutive month where the annual increase was higher than the midpoint of 4.5% of the South African Reserve Bank’s monetary policy target range. The latest headline consumer price index, for August, was released on Wednesday.

The increase in the inflation rate mirrors the experience of consumers who have found that they are spending more than they used to. The main contributors to the increase were food and non-alcoholic beverages, housing and utilities, transport and miscellaneous goods and services.

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Food and non-alcoholic beverages

Food and non-alcoholic beverages increased by 6.9% year-on-year and contributed 1.2 percentage points to the total CPI annual rate of 4.9%.

Although food inflation remained unchanged for a third month, the food and non-alcoholic beverages group was the second largest contributor to the annual inflation rate in August, recording an increase of 6.9%, the highest level of food inflation since June 2017.

However, there are signs that food inflation may have begun to slow, Statistics SA says. The monthly increase in August 2021 was 0.2%, identical to the readings for July and June. The average monthly increase over the past 12 months was 0.6%.

Four of the 11 food and non-alcoholic beverage categories registered monthly decreases in August, while one showed no change and six recorded increases.

• The prices of bread and cereal products declined by 0,5% from July 2021, while maize meal prices decreased by 1.2% and white bread by 1.1%. The annual increase was 3.5%.
• Meat inflation continues to accelerate, reaching 10,7% in August, the highest level since February 2018, when the rate was 11.4%. Individually quick frozen chicken products were 1.6% more expensive in August compared to July, while minced beef cost 0.4% less.
• Annual inflation for oils & fats registered at 21.3% in August, slightly down from 22.4% in July. Cooking oil prices decreased by 0.4% and margarine by 0.8% month-on-month.

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Housing and utilities

According to Statistics SA, housing and utilities increased by 3.8% year-on-year and contributed 0.9 of a percentage point.

Transport

Transport inflation accelerated due to vehicle and fuel prices, with transport increasing by 9.9% year-on-year and contributing 1.4 percentage points. Transport was also the most significant contributor to both the annual and monthly CPI readings in August, increasing by 9.9% annually and 2.2% monthly.

Vehicle prices increased at a rate that was higher than overall inflation from May 2020 to August 2021 while vehicle inflation mostly lagged overall inflation during 2018 and 2019.

Petrol prices recorded all-time highs in August 2021, with the price of inland 95-octane petrol, for example, reaching R18.30 per litre. Fuel prices increased by 4.9% between July and August and by 19.6% over the last 12 months.

Public transport fares increased by 1.5% between July and August, underpinned by an increase in airfares, which were up by 21.6%. The annual increase for public transport was 5.3%.

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Miscellaneous goods and services

Miscellaneous goods and services increased by 4.2% year-on-year and contributed 0.7 of a percentage point. In August the annual inflation rate for goods was 7.3%, up from 6.7% in July and for services 2.8%, up from 2.7% in July.