Skip to main content

Consumer prices rise slightly faster than expected, led by fuel

| Economic factors

Inflation accelerated to 5.1% in July from 4.6% in June, coming in slightly higher than economists anticipated.

Analysts expected inflation to rise to 5% due to municipal tariff increases and base effects involving food and fuel.

Statistics SA reported on Tuesday that July’s consumer price index (CPI) was 108.5 points, up from 107.6 in June and 103.2 in July 2017.

The annual change in CPI is the key measure used by the Reserve Bank’s monetary policy committee to set interest rates.

The committee will announce its next interest rate decision on September 20.

Economists generally believe the central bank will hold its repo rate at 6.5% until 2019, but Investec Bank economist Annabel Bishop recently broke ranks, forecasting interest rates may rise by 25 basis points as early as the next meeting if the rand continues to weaken.

Statistics SA reported the fuel component of CPI showed annual inflation of 25.3% in July from the same month in 2017.

Food inflation was 3%, helped by bread and cereal prices declining by 3% over the year.

Fish was 6.6% more expensive, and meat 5.6%.

Vegetable inflation was 8.8%, while fruit prices fell 4.2%, according to Stats SA.

The residual effects of April’s VAT hike, higher fuel prices, rand depreciation and rising food prices are all likely to push up inflation in the next months, said Novare economic strategist Tumisho Grater.

FNB expected July inflation to rise to 5% year on year due to a weak exchange rate and the elevated oil price, while Investec expected inflation of 4.9%.

Pin It

Related Articles

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...
Stats SA reports that retail trade sales increased by 2.3% year-on-year in February 2024. The largest contributor to this increase was general dealers (6.4% and contributing 2.8 percentage points).
By: Shaun Jacobs – Daily Investor Funding the government’s National Health Insurance (NHI) scheme would require a 31% increase in personal income tax, or a 6.5% increase in VAT, or a ten times increase in payroll tax, threatening South Afric...
By: Given Majola - IOL Business South African consumers’ disposable income was being eroded by persistently high interest rates and inflation (especially food inflation) while a lack of any meaningful economic growth was constraining their salaries.