Food inflation lowest in 45 months

Food inflation was the lowest in 45 months in June, the lowest since September 2020 at the peak of the Covid lockdown, when the rate was 3.8%.

According to Statistics SA, after stalling at 4.7% in April and May, the annual rate for food and non-alcoholic beverages edged lower to 4.6% in June after peaking at 14.0% in March 2023.

Several food and non-alcoholic beverage categories registered lower annual rates in June, including sugar, sweets and desserts, vegetables, fruit, milk, eggs and cheese and fish, although inflation quickened for hot beverages, bread and cereals, oils and fats, cold beverages and meat.

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Food price increases

The annual rate for hot beverages steamed to 16.5% in June from 14.2% in May. The monthly change of 2.2% was driven by sharp price increases for drinking chocolate (up 3.5%), black tea (up 2.7%), instant coffee (up 2.2%) and rooibos tea (up 1.6%).

The annual rate for bread and cereals experienced its first increase in 14 months, rising to 5.2% in June from 3.9% in May. The monthly rate was 1.5%, with notable increases for maize products, such as maize meal (up 3.3%) and samp (up 3.0%).

This increase must be considered against the background of the producer price index (PPI) for final manufacturing, which measures prices at the factory gate, recording a 7.2% monthly (4.6% annual) increase for maize products in May.

Maize in the agriculture PPI increased by an annual 23.8%. Statistics SA points out that PPIs are often leading indicators of the CPI and therefore the data suggests that elevated inflation for maize-based products is widespread.

The milk, eggs & cheese category has experienced six months of slower inflation. The rate for June was 7.3%, down from 14.5% in December 2023. Annual egg inflation recorded its seventh consecutive month of decline, cooling to 20.4%.

This graphs shows food and beverage products that recorded the most significant annual and monthly price increases in June.

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Other notable price changes

Other notable price changes include housing and utilities and transport.

Housing and utilities recorded an annual inflation rate of 5.5% in June, lower than the 5.8% recorded in May.

Housing rentals are surveyed quarterly. Actual rentals increased by 0.8% in the second quarter of 2024 compared to the first quarter. Imputed rentals edged higher by 0.7% over the same period. Townhouses recorded the highest quarterly change at 1.5% (actual rentals, which means rent or other compensation paid under a lease or similar agreement) and 1.2% (imputed rentals, which means the rental price an individual would pay for an asset they own). Domestic worker wages registered a quarterly increase of 1.6%.

Annual transport inflation cooled to 5.5% in June from 6.3% in May. New vehicle inflation slowed to 5.2% from a recent high of 8.4% in September 2023. Data from Naamsa indicates that there is lower demand for new passenger vehicles, with sales declining by 9.0% compared to a year ago in June. Inflation for used vehicles was 3.0%, down from 3.7% in May.

Fuel prices dropped by 4.6% between May and June, taking the annual rate for fuel to 7.6% from 9.3%.

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Main contributors to inflation

The main contributors to the 5.1% annual inflation rate were:

• housing and utilities (increased by 5.5% and contributed 1.3 percentage points)
• miscellaneous goods and services (increased by 7.0% and contributed 1.0 percentage point)
• food and non-alcoholic beverages (increased by 4.6% and contributed 0,9 of a percentage point) and
• transport (increased by 5.5% and contributed 0,8 of a percentage point).

In June 2024, the annual inflation rate goods was 5.5%, down from 5.7% in May 2024, while services was 4.6%, down from 4.7% in May 2024.