Inf lation stays at 5.9%

STATS SA: THIRD TIME RATE COMES SO CLOSE TO UPPER TARGET

Transport is one of the main contributors to the increase.

Inflation remained at 5.9% in April, the same as in March, but 0.6% higher compared to April in 2021, with the annual inflation rate for goods at 8.5%, down from 8.7% in March and 3.5% for services, up from 3.4% in March.

According to Statistics SA, this was the third time the inflation rate has come so close to the upper target for inflation of 6% required by the Reserve Bank. The last time the inflation rate breached 6% was in 2017.

The monetary policy committee of the Reserve Bank will meet today to decide on an interest rate hike to keep inflation down.

Transport was unsurprisingly one of the main contributors to the annual inflation rate, increasing by 14.7% compared to April 2021 and contributing 2.0 percentage points of the inflation rate. Between March and April, fuel prices increased by 2.2%, but by 29% year-on-year.

Food and nonalcoholic beverages were also one of the main contributors and increased by 6.0% compared to April 2021 and contributed 1.0 percentage point to the total CPI annual inflation rate. In March, the increase was 6.2%.

The fallout of the war in Ukraine can now clearly be seen in the price of food, especially regarding sunflower oil and wheat.

The average price of 1l sunflower oil increased from R31.24 in March to R34.89 in April.

The biggest increases in meat prices were for stewing beef that cost 2.8% more in April than in March, mince that cost 2.2% more and individually frozen chicken pieces that cost 1.4% more.

Housing and utilities were also a main contributor and increased by 4.8% compared to April last year and contributed 1.2 percentage points to the inflation rate.

Miscellaneous goods and services increased by 3.8% year-onyear and contributed 0.6 of a percentage point to the inflation rate.

Goods and services recording the largest increases in April compared to March were:

Oils and fats increased by 5.4%; Fuel increased by 2.2%; Private transport and other running costs by 2.1%;

Books, newspapers and stationery by 1.5%;

Buying a new vehicle by 1.3%; Tobacco by 1.3%;

Hot beverages by 1.3%; Insurance by 1.1%; Alcoholic beverages (spirits) by 1.1%;

Meat by 1%; and

Sugar, sweets and desserts by 0.9%.

Economic research group Oxford Economics Africa said although price pressures increased in recent months, high inflation has not been a major headache for South African policymakers when compared to advanced economies.

The group expects inflation to average 5.9% this year compared to 4.5% in 2021. “Although headline inflation has stayed above the midpoint of the South African Reserve Bank’s inflation target band of 3%-6% for the 12th consecutive month, it has not breached the upper bound since March 2017.”