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Food inflation jumps to almost 4-year high as consumer inflation keeps rising

23 June 2021 6:43 PM
Tags:
Fuel prices
Food prices
The Money Show
Stats SA
Inflation
Bruce Whitfield
Consumer price inflation
CPI
George Glynos
ETM Analytics
inflation rate

'It's a temporary spike'. ETM Analytics' George Glynos analyses the latest CPI figures on The Money Show.

Annual consumer price inflation climbed above the 4,5% midpoint of the SA Reserve Bank’s (Sarb's) monetary policy target range last month.

It reached 5.2% in May, up from 4,4% in April.

RELATED: How will shock consumer inflation hike affect interest rate decision?

This is the highest level since November 2018 (also 5,2%) says Stats SA.

Director for price statistics, Marietjie Bennett, summed up the main contributing factors:

"The main contributions to May's inflation rate were transport and food and non-alcoholic beverages. Despite a small monthly drop in the fuel price in May, the annual increase quickened to 37.4% from 21.4% in April."

Annual food and non-alcoholic beverages inflation increased to 6,7% in May from 6,3% in April.

This is the highest level since July 2017.

The CPI increase is no reason for panic says George Glynos, Head of Research at ETM Analytics.

We have an inflation risk model that gives us perspective going out 6-9 months and it's still telling us that inflation is likely to be benign, mostly because the credit cycle that we're in at the moment is particularly weak.

George Glynos, Head of Research - ETM Analytics

There's not all that much room for inflation to take hold in a sustained manner for a prolonged period of time.

George Glynos, Head of Research - ETM Analytics

We're seeing this as temporary. The Reserve Bank I think is viewing it very much the same way - they're not likely to be panicking and responding very aggressively in the short-term...

George Glynos, Head of Research - ETM Analytics

... so we look through this spike to a more settled environment later this year or beginning of next year.

George Glynos, Head of Research - ETM Analytics

Glynos points out that core inflation is at 3.1% - lower than the 3.6% target.

"It strips out a lot of the volatile prices that have skewed the headline number up."

Listen to Glynos' analysis in the audio clip below:


This article first appeared on CapeTalk : Food inflation jumps to almost 4-year high as consumer inflation keeps rising




23 June 2021 6:43 PM
Tags:
Fuel prices
Food prices
The Money Show
Stats SA
Inflation
Bruce Whitfield
Consumer price inflation
CPI
George Glynos
ETM Analytics
inflation rate

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