Consumer inflation accelerated to 7.8% in July, up from the already-high 7.4% in June, driven mainly by fuel and food prices to reach another 13-year high.
The consumer price index (CPI) reading, which remains outside the Reserve Bank’s target range of 3%-6%, is slightly higher than the Thomson Reuters consensus of 7.7% but in line with market predictions of 14 economists.
FNB economists said they expected inflation to print at 8.0% in July, “reflecting continued fuel and food price pressures, compounded by the survey of municipal utility increases”.
Stats SA on Wednesday said price increases for products such as bread and cereals, oils and fats, and fuel and electricity “made a notable impact on July’s reading”.
Old Mutual Investment Group chief economist Johann Els said he also expected inflation to rise to 7.8%.
“This will probably be the peak, thanks to petrol price declines in August and likely in September as well,” Els said.
Headline inflation overshot consensus expectations, reaching 6.5% in May and 7.4% in June. In July the Reserve Bank warned that 7.4% was unlikely to be the peak and many economists fear that consumer inflation could have climbed as high as 8% year on year in July. It was last this high in May 2009.
Core inflation, which excludes prices of food, nonalcoholic beverages, fuel and energy, rose to 4.6% in July, the highest since October of 2017, from 4.4% in June, breaching the midpoint of the Bank’s target range for the first time in more than four years. The Bank’s monetary policy committee prefers to anchor inflation expectations close to 4.5%.
Stats SA said the main contributors to the high inflation rate were food and nonalcoholic beverages; housing and utilities; transport; and miscellaneous goods and services.
Transport, food and housing utilities continued to place upward pressure on the annual rate, said Patrick Kelly Stats SA chief director for price statistics.
Inflation for non-durable goods, which are those items bought more frequently like food, drink, electricity and fuel, is in double-digit territory at 14.4%. This is much higher than the inflation rate of 4.8% that was recorded for durable goods such as cars and appliances.
Inflation rate for food and nonalcoholic beverages was 9.7% in July, higher than 8.6% in June.
Petrol and diesel prices also rose by a marked R2.57/l and R2.31/l, respectively, in July, feeding into the high annual inflation rate.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.