Consumer inflation edges up in August, petrol price in SA hits all-time high
South Africa's consumer price inflation went up to 4.9% (year on year) in August, according to Statistics SA's Consumer Price Index (CPI).
This is a slight increase from 4.6% in July.
It's the fourth consecutive month where the annual increase is higher than the midpoint (4,5%) of the Reserve Bank’s monetary policy target range.
Hikes in transport, petrol and food prices were among the biggest drivers of the increase.
Transport inflation accelerated on the back of vehicle and fuel price rises.
Stats SA says petrol prices recorded all-time highs in August, with the price of inland 95-octane petrol, for example, reaching R18,30 per litre
The food and non-alcoholic beverages product group was the second largest contributor to the annual inflation rate in August, recording an increase of 6,9%.
However, there are signs that food inflation may have begun to slow.
Arabile Gumede interviews Gina Schoeman, Economist at Citibank.
Almost the entire month on month inflation rate was driven up by the transport category.Gina Schoeman, Economist - Citibank
She notes that 4.9% is still low, historically, for South Africa but says there is a need for caution.
I think the South African Reserve Bank will certainly have taken this into account.... We think tomorrow's meeting will be about signalling their intent to raise rates again... but they've made it abundantly clear that they're not going to take interest rates back to the levels they were pre-Covid... We think they're going to hike only by 25 basis points in November...Gina Schoeman, Economist - Citibank
Unfortunately for the next couple of quarters, up until about the second quarter of next year, we're expecting the CPI to remain around the 4.8-4.9% average.Gina Schoeman, Economist - Citibank
Thereafter, views are mixed. We think inflation is going to head lower to about 4%, however the last forecast we got out of the Reserve Bank suggest that they think it's going to slow down.Gina Schoeman, Economist - Citibank
What cannot be disputed is that the economy is very weak, despite the rebound coming out of the Covid-19 crisis says Schoeman.
Listen to the interview in the audio clip below:
This article first appeared on CapeTalk : Consumer inflation edges up in August, petrol price in SA hits all-time high
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