Inflation increases again in January

Inflation increased again in January from 5.1% in December to 5.3%, mainly due to increases in the prices of food and non-alcoholic beverages, housing and utilities, miscellaneous goods and services and transport.

According to Statistics SA, food and non-alcoholic beverages increased 7.2% and contributed 1.3 percentage points, while housing and utilities increased 5.7% and contributed 1.3 percentage points. Miscellaneous goods and services increased 5.4% and contributed 0.8 of a percentage point and transport increased 4.6% and contributed 0.7 of a percentage point.

In January 2024, the annual inflation rate for goods was 6.6%, up from 6.4% in December 2023 and for services it was 4.0%, up from 3.8% in December 2023.

The categories in the consumer price index basket that increased the most on a yearly basis were restaurants and hotels at 8.0%, food and non-alcoholic beverages at 7.2%, and health at 6.5%.

Although fuel prices were lower in January they were still higher than a year ago. A monthly decline of 5.2% in fuel prices between December and January was not enough to subdue the annual rate for fuel, which jumped from -2.5% in December to 3.3% in January, contributing to a sharp increase in annual transport inflation to 4.6% from 2.6% in December.

Transport inflation cooled in January

ALSO READ: Inflation lower in December and lower for 2023 than in 2022

However, inflation for several transport categories cooled in January. With the festive season over, public transport tariffs decreased by 2.0% in January compared to December, dragged lower by monthly price decreases for long-distance buses (down 21.2%), car rental (down by 12.1%) and air fares (down by 4.1%).

Wining and dining were also more expensive, with prices for the restaurants and hotels group increasing by 8.0% in the 12 months to January, up from December’s 7.0%. Restaurant-related product groups that recorded relatively high annual increases in January included fish and seafood products that cost 9.9% more, red meat-based products that cost 9.7% more and hamburgers that cost 8.6% more.

After hotel room rates increased during the festive season, rates decreased by 2.1% between December and January but despite this decline, hotel rooms remain more expensive than a year ago, with prices increasing by 10.7% in the last 12 months.

ALSO READ: Concern that food inflation is still too high

Food inflation also decreased

Some good news for consumers is that food inflation cooled for a second consecutive month, with annual inflation for food and non-alcoholic beverages slowing to 7.2% in January from 8.5% in December and 9.0% in November. All the sub-categories also recorded lower annual rates, but sugar, sweets and desserts, oils and fats and cold beverages cost more than a year ago.

According to Statistics SA, the annual rate for sugar, sweets and desserts increased from 17.9% in December to 18.5% in January. Sugar prices drove much of the upward momentum, with the annual rate for white sugar accelerating from 20.1% in December to 21.2% in January.

Prices at the factory gate were also elevated with the producer price index reporting sugar inflation at 23.5% in December, with raw cane sugar increasing by 36.7% and refined sugar by 18.8% in the last 12 months.

Annual inflation for bread and cereal products declined from 7.5% in December to 6.5% in January, while meat inflation was also softer, cooling from 3.9% to 2.2%.

ALSO READ: Shisa Nyama Index: Has food inflation reached its peak?

Other notable price changes

Other notable price changes in January include annual inflation for miscellaneous goods and services that ticked up to 5.4% in January from 5.1% in December and prices for personal care items increasing by an annual rate of 9.5%, lower than the 10.3% rise recorded in December. An increase in bank fees contributed to a 5.5% annual increase in financial services.

These products recorded the most significant annual and monthly price increases in January: