Skip to main content

Inflation does not bode well for consumers or retailers

| Economic factors

January 2016 inflation jumped to a worse than expected 6.2% y/y, up from December’s 5.2% y/y as the lower base of last year begins to take hold.

The month-on-month number grew 0.8% in a clear sign that pass-through effects are accelerating.

Goods inflation registered 6.5%, the first time since 2014 that it breached 6%. Services inflation also reached the 6% mark, reflecting not only rand weakness, but also the growing inability of businesses to absorb these cost pressures. Food and transport costs in particular are driving the number higher, a trend we expect to continue given the drought, slightly higher oil prices and persistent currency weakness.

The number does not bode well for consumers or retailers, both of whom are already under pressure, and suggests that the SARB MPC may opt to again raise interest rates (likely by 25bps) at next month’s meeting.





Pin It

Related Articles

By: Hanno Labuschagne - MyBroadband An anticipated strengthening of the rand and slipping global oil prices could result in lower petrol prices at the pumps next month.
By: Myles Illidge - MyBroadband Eskom has asked the National Energy Regulator of South Africa (Nersa) for a 36.15% electricity tariff hike for the customers it directly supplies and charges, Daily Maverick reports.
By: Yogashen Pillay – The Mercury Economists are predicting a big drop in petrol and diesel prices next month, saying it will bring much-needed relief to under-pressure consumers.
By: Jason Woosey - IOL Petrol and diesel prices are set to come down from Wednesday, June 5, according to a statement released by the Department of Mineral Resources and Energy (DMRE).
By: Opinion – IOL Business Report South Africans have been collectively waiting with bated breath for some small financial reprieve from the relentless price hikes of the past few years that have driven them to the brink of despair, chief among t...