Consumer inflation drops to 6.0% in July
Statistics South Africa on Wednesday announced that the country’s consumer price index (CPI) was 6.0% in July 2016, down from 6.30% in June. The index increased by 0.8% month-on-month (m/m) in July 2016.
Housing and utilities decreased from 1.6 percentage points in June to 1.4 percentage points in July. The index increased by 5.8% year-on-year (y/y).
Food and non-alcoholic beverages contributed 0.1 of a percentage point in July. The index increased by 0.5% m/m, mainly due to a 2.7% increase in sugar, sweets and desserts, a 1.1% increase in milk, eggs and cheese and a 0.8% increase in bread and cereals.
Housing and utilities contributed 0.6 of a percentage point in July. The index increased by 2.4% m/m, mainly due to a 10.1% increase in water tariffs, a 5.5% increase in assessment rates and a 7.5% increase in electricity tariffs.
Transport contributed 0.1 of a percentage point in July. The index increased by 0.8% m/m, mainly due to the 11 cents per litre increase in the petrol price.
In July the CPI for goods increased by 6,5% year-on-year (down from 6,7% in June), and the CPI for services increased by 5.7% y/y (down from 5,8% in June).
Provincial annual inflation rates ranged from 4.8% in Northern Cape to 7.9% in Limpopo.
Overberg Asset Management said in its weekly overview of the economic and political landscape in South Africa that it expected CPI to moderate slightly from 6.3% year-on-year in June to 6.1% in July, according to the consensus forecast
“However, CPI Is unlikely to break below the SA Reserve Bank’s (Sarb’s) 3-6% target range over the foreseeable future due to the lingering effect of drought-induced food price increases and high administered price increases such as municipal rates and electricity. The Sarb expects CPI to remain above the target range until the third quarter 2017, ” it said.
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