Annual inflation accelerated for the second successive month to 5.4% in September, up from 4.8% in August and slightly above market forecasts of 5.3%, according to Stats SA data published on Wednesday.
While the rate remains comfortably within the Reserve Bank’s 3%-6% target band, it reinforces the recent hawkish language from Bank officials regarding inflation risks.
Annual core inflation, which excludes prices of food, non-alcoholic beverages, fuel and energy, eased to a 13-month low of 4.5% in September from 4.8% in the previous month and below market forecasts of 4.7%.
Stats SA data shows the fuel index increased for a second consecutive month, rising by 7.6% between August and September.
The price of inland 95-octane petrol jumped by R1.71/l in September, reaching a 13-month high of R24.54. Stats SA said the transport category — mainly influenced by fuel — exerted strong upward pressure on the monthly inflation rate.
The agency said transport contributed 0.4 of a percentage point to the 0.6% monthly rise in the consumer price index (CPI).
It added that after three consecutive months in negative territory, annual fuel inflation jumped from -11.7% in August to 1.5% in September.
The data shows that food inflation also ticked slightly higher.
Patrick Kelly, Stats SA chief director for price statistics, said that after cooling for the past five months, the annual rate for food & non-alcoholic beverages inched higher to 8.1% from 8% in August.
Meat, fish, oils and fats, fruit and non-alcoholic beverages all registered higher annual rates in September. Kelly said lower rates were recorded for bread and cereals, sugar, sweets & desserts, vegetables and milk, eggs and cheese.
Meat prices increased on average by 0.6% between August and September, pushing the annual rate up to 3.8%.
He said poultry related products experienced some upward price movements in September as producers started to cull birds in response to the outbreak of avian flu.
Other notable price changes for the September CPI include housing rent data for the third quarter. The annual rate for actual rentals was 2.6%, down from 2.7% in the second quarter, while that for imputed rentals was also 2.6% lower from 2.9% in the second quarter.
Annual health inflation edged higher to 6.5% in September from 6.2% in August, marking the highest rate for health since November 2017 when it was also 6.5%.
The data shows prices for medical products increased by 7.5% in the 12 months to September.
On a monthly basis, consumer prices rose by 0.6% in September, after a 0.3% increase in August.
David Omojomolo, senior economist at Capital Economics, said the data release is likely to reinforce the recent hawkish language from Bank officials regarding inflation risks.
“While the softening in core inflation is encouraging, the fact that inflation has got much closer to the upper limit of the Bank’s target range will be concerning,” Omojomolo said.
“This lends support to our view that the Bank is unlikely to start its interest rate cutting cycle until early next year and then proceed only slowly.”
IG senior market analyst Shaun Murison said the September figures are more or less in line with forecasts on an aggregated basis, and are unlikely in themselves to change the path of monetary policy in SA.
“But risks do remain. Currently expectations are that the Bank will maintain lending rates at current levels until the end of the year and then start to lower them in 2024, perhaps by 100 basis points over the year,” Murison said.
He added recent comments by the Bank suggests it is not looking into stepping in to influence recent movements in the rand.
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.