CPI slows in August

The annual Consumer Price Index (CPI) eased to 5.9 percent in August, Statistics South Africa (Stats SA) announced on Wednesday.

“Headline inflation decreased to 5.9 percent for August 2016. That is 0.1 percent down on the 6 percent recorded in July,” said Joe de Beer, Deputy Director General at Stats SA.

Contributors to the annual change of 5.9 percent in CPI were food and non-alcoholic beverages at 1.7 percent, housing and utilities at 1.4 percent and miscellaneous goods and services at 1.1 percent, among others.

Food and non-alcoholic beverages contributed to the monthly change of 0.1 percent as did transport recording a -0.3 percent.

“When looking at food month-on-month we saw that vegetables and meat declined in terms of their prices but there were increases in oils and fats, bread and cereals as well as sugar, sweets and desserts,” noted De Beer.

The decrease in headline inflation was in line with market expectation including that of Nedbank economists.

“We expect inflation to increase to marginally above 6 percent in the next few months as earlier rand weakness works itself through the numbers.

Consumer inflation is expected to end the year at 6 percent and average 6.2 percent in 2016 as a whole,” said Nedbank economists.

“The biggest threat to the inflation outlook is still the currency and a weak rand will limit the decrease in prices in 2017,” noted the economists.

Meanwhile, Stats SA announced on Wednesday that it will make changes to the CPI basket of goods and services and the weights attached to these.

This would take effect from the January 2017 release of CPI.

It is international practice that reweighing takes place at least every five years.

– SAnews.gov.za