Inflation dips below 4.5% in August – lowest since April 2021

Inflation slowed for a third consecutive month, cooling to 4.4% in August from 4.6% in July. This is the lowest inflation print since April 2021 when the rate was also 4.4%.

The reduction in inflation was thanks to lower annual rates recorded for transport, housing, restaurants and hotels.

Statistics SA announced the inflation rate for August on Wednesday but there was not only good news, as inflation for food, non-alcoholic beverages, alcoholic beverages and tobacco edged higher.

ALSO READ: Inflation decrease: All signs now point to repo rate cut

Transport inflation wanes from 2022 high

All transport-related products recorded softer annual rates in August. As fuel prices continued to trend downward, declining for a third consecutive month, the fuel index dipped by 0.5% month-on-month, slowing the annual rate to 1.8%. Motorists using inland 95-octane petrol paid 15c less per litre in August (R23.11) compared to July (R23.26).

Diesel followed a similar trend, with motorists enjoying a fourth consecutive cut as the average price for a litre of diesel was R23.23 in August compared to R23.35 the month before.

Statistics SA points out that transport’s influence on overall inflation has waned since mid-2022 when it was the biggest factor behind the increase in the cost of living. It accounted for 44% of overall inflation in July 2022, but now transport accounted for 9%, placing it behind other major contributors such as housing and utilities and food and non-alcoholic beverages.

In August, housing and utilities accounted for a quarter of the total inflation rate.

ALSO READ: Average food basket price slightly lower in August for low-income consumers

Food inflation increases again

After trending down for the past eight months, annual food and non-alcoholic beverages inflation picked up in August, increasing to 4.7% from 4,5% in July. Most product groups registered higher annual rates, including bread and cereals, meat, fish, milk, eggs and cheese, oils and fats and vegetables.

According to Statistics SA, lower rates were recorded for fruit, sugar, sweets and desserts and hot and cold beverages.

Inflation for bread and cereals increased for a third successive month. Products with the largest annual price increases include rice which increased by 17.3%, pizza and pies (up 10.9%) and hot breakfast cereals (up 7.9%).

The monthly increase in the price of bread and cereals was 0.4%, with notable increases recorded for grain-based products such as bread flour (up 2.1%), brown bread (up 1.3%) and white bread (up 1.2%).

ALSO READ: Inflation now expected to average 5.1% this year

Meat cheaper, but coffee costs a lot more in August

Statistics SA points out that while the meat index increased on an annual basis, prices dipped by 0.4% between July and August. Several chicken and beef products were cheaper in August, with notable decreases recorded for fresh whole chicken (down 2.2%), sausage (down 1.7%), chicken giblets (down 1.3%) and beef mince (down 1.3%).

However, the prices of bacon, beef extract, corned beef, fresh chicken portions, ham and biltong increased in August.

In addition, hot beverage inflation continues to burn, Statistics SA says. Despite the annual inflation slipping from 17.6% in July to 17.5% in August, it remains the group with the highest rate among all the food and non-alcoholic beverages categories, with instant coffee inflation hitting a 19-month high at 22.3%. The average price for 250 grams of instant coffee was R67.37 in August up from R52.71 in August 2023.

These food and beverage products recorded the most significant annual and monthly price increases in August: