SA’s annual consumer inflation for May accelerated to 6.5%, well above market expectations, amid relentless increases in food and petrol prices.
Stats SA said on Wednesday that the consumer price index (CPI) rose 6.5% in May, breaching the Reserve Bank’s upper limit of 6%. This is the highest reading since January 2017, when the inflation rate was 6.6%, and well above market expectations of 6.2%.
Annual core inflation, which excludes prices of food, nonalcoholic beverages, fuel and energy, also quickened to 4.1% in May 2022, the highest since August 2019, from 3.9% the previous month, Stats SA said.
The main contributors to the 6.5% inflation rate were food and nonalcoholic beverages; housing and utilities; transport; and miscellaneous goods and services.
Food and nonalcoholic beverages increased by 7.6% year on year, and contributed 1.3 percentage points. Housing and utilities increased by 4.9% year on year, and contributed 1.2 percentage points, while transport increased by 15.7% year on year, and contributed 2.1 percentage points.
Stats SA said fuel particular remains a major contributor to inflation. “Without the impact of fuel from the CPI reading in May, the headline rate falls to 5.1% from 6.5%,” Stats SA said.
Diesel prices jumped by 8.1% between April and May, taking the annual rate to more than 45%. The average price of a litre of diesel in May 2021 was R16,20, meaning it cost R729 to fill a 45l tank. Twelve months later, with the average price at R23.67/l and filling the same tank costs R1,065.
Petrol prices moderated between April and May, edging lower by 0.7%. Despite this decline, petrol is almost 27% more expensive than it was in May 2021.
The higher inflation rate is largely fuelled by global supply linkages mostly caused by the war in the Ukraine, which is likely to persist for the rest of 2022 and may have significant further effects on global prices.
China’s response to the new Covid-19 outbreak in May also contributed to higher global inflation. These supply-side shocks are filtering into the SA economy.
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