The annual Consumer Price Inflation (CPI) in South Africa has surged for the third consecutive month, nearing the upper limit of the South African Reserve Bank’s inflation target range. This worrisome trend comes just ahead of the Monetary Policy Committee (MPC) meeting scheduled for tomorrow, where the final repo rate decision for 2023 will be deliberated.
Inflation on the Upward Trajectory
Stats SA data, released on Wednesday, indicates a notable increase in annual inflation from 5.4 percent in September to 5.9 percent in the latest month. Additionally, monthly consumer prices have experienced a 0.9 percent increase, marking the highest monthly rise in three months.
Soaring Prices in Key Categories
Certain food items have witnessed substantial price hikes over the past year, contributing to the inflationary pressure. Potatoes and eggs, in particular, have seen significant increases of 64.6 percent and 24.4 percent, respectively. Rice and banana prices have also climbed by 20.8 percent and 33 percent, respectively.
Categories experiencing annual inflation rates above 6.0 percent in October include Food and Non-Alcoholic Beverages at 8.7 percent, Transport at 7.4 percent, Health at 6.4 percent, and Restaurants and Hotels at 6.3 percent.
Food Prices on the Move
For the second consecutive month, the prices of Food and Non-Alcoholic Beverages (NAB) have accelerated, reaching 8.7 percent in October. This marks an increase from 8.1 percent in September and 8.0 percent in August. Stats SA highlights a significant 1.5 percent monthly increase, the highest since January this year.
Food Price Changes: October 2022 vs October 2023
Price Drops
- Bread and cereals: 0.4 percent cheaper
- Maize meal: 1.3 percent cheaper
- Meat: 0.4 percent cheaper
Price Hikes
- Potatoes: 64.6 percent more expensive
- Bananas: 33 percent more expensive
- Vegetables: 23.6 percent more expensive
- Rice: 20.8 percent more expensive
- Sweet potatoes: 16.4 percent more expensive
- Tomatoes: 15.2 percent more expensive
- Pumpkin: 11.1 percent more expensive
Impact of Avian Flu on Poultry Prices
Stats SA reports that poultry-related products, including eggs, have faced increased upward pressure due to the avian flu outbreak. The culling of millions of chickens has resulted in market shortages and panic buying, contributing to the overall inflationary trend.
Regional Disparities in Price Changes
Interestingly, price increases vary across regions, with Western Cape consumers experiencing the most significant impact. For instance, a tray of six eggs rose by R6.42 from an average price of R17.71 in October 2022 to R24.13 in October 2023. Gauteng consumers saw an additional cost of R4.81 over the same period. However, Free State bucked the trend, with the average price for a tray of six eggs decreasing from R19.33 in October 2022 to R18.38 in October 2023.
Price Changes for Non-Food Items: October 2022 vs October 2023
Price Drops
- New and used cars: 0.6 percent cheaper
Price Hikes
- Transport: 11.2 percent more expensive (mainly due to the rising fuel price)
- Hotels: 9.7 percent
- Restaurants: 6.4 percent
In conclusion, the escalating inflation poses challenges for the upcoming MPC decision, requiring a careful assessment of economic indicators and potential policy implications to navigate the complex economic landscape.
