Food prices increase by 3.7% – Stats SA

South African annual consumer inflation slowed in September, falling to 4,1% from 4,3% recorded in August.

The inflation rate has hovered between 4% and 5% since December last year and has been below 4,5% for the past three months. More significantly, it has remained below the South African Reserve Bank’s (SARB) 6% monetary policy ceiling since April 2017. Food prices increased by 3.7%, slightly lower than the 3.8% in August.

Due to poor harvests bread and cereal prices have increased significantly in the past 12 months. Electricity was 11.8% more expensive, while wine prices have been climbing steadily since the 2016 drought. In particular, the 2019 harvest is the lowest since 2005 and strong export demand further limits local availability.

The product groups that had the largest negative annual rates were telecommunications equipment and package holidays. The sharp deflation in telecommunications equipment –which consists mainly of cellphones – stems from the fact that the CPI is a constant quality index. In simple terms, this means that the improvement in phone features outstrips any price increases introduced when new models are released.

Declining prices in domestic holiday packages may stem from the current poor economic conditions. Western Cape has seen the biggest provincial decrease in package prices, registering a 9,3% fall over the last 12 months.

Motorists keenly follow announcements of monthly changes in fuel prices. The price of inland 95-octane petrol in September was R16,03 per litre, 5c lower compared with R16,08 recorded in September 2018

The rand dropped 5cents against the dollar on the back of the announcement, but at 10:30 was again trading back at R14.65 to the greenback.