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Food prices help slow consumer inflation

| Economic factors

Consumer inflation slowed in March, as food prices continued to moderate. The consumer price index (CPI) rose 6.1% from a year earlier, after a 6.3% increase in February, Statistics SA said.

Food inflation continued to slow, with the food and nonalcoholic beverages index rising 8.7% from a year earlier, after a 9.9% increase in February — which was its first month in single digits since April 2016. Food inflation is moderating as the effects of a long, severe drought have eased in many parts of the country.

Excluding beverages, food prices also rose 8.7% in March from a year earlier, after February’s 10% increase.

CPI has spend most of the past year outside the Reserve Bank’s 3%-6% target range, and could head higher in April, after the rand took a knock from President Jacob Zuma’s Cabinet reshuffle.

Fuel prices, another key driver of inflation, rose 15% year on year in March but fell 0.4%. Petrol prices rose 29c a litre in February, but fell again in March, by 8c/l.

An incrase of more than 50c is expected for April, however, and motorists are also having to digest higher fuel and Road Accident Fund levies. Former finance minister Pravin Gordhan announced a 30c/l fuel levy hike and a 9c/l RAF levy increase in his February budget presentation. These took effect on April 1, and their effects will be seen in the next CPI release.

Compared with a month earlier, CPI rose 0.6% in March.


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