Consumer prices in South Africa are skyrocketing due to a perfect storm of Covid restrictions, the Ukraine war, logistics issues and a Chinese economic slowdown.
And data from Statistics South Africa (Stats SA) shows that annual consumer price inflation (CPI) reached 6.5% in May. The figure is a 0.7% increase from the 5.9% in April and March.
Stats SA said the increase breaks through the upper limit of the South African Reserve Bank’s monetary policy target range. This is the highest reading since January 2017 when the rate was 6.6%, it said.
The impact of fuel prices
The agency said transport and food and non-alcoholic beverages (NAB) accounted for just over half of the annual rate, with sharp price increases recorded in both categories. “Fuel, in particular, continues to be a major contributor. If the impact of fuel is removed from the CPI reading in May, the headline rate falls to 5.1% from 6.5%.
“Diesel prices jumped by 8.1% between April and May, taking the annual rate to over 45%. The average price of a litre of diesel in May 2021 was R16.20 – meaning it cost R729 to fill a 45-litre tank. Twelve months later, with the average price at R23.67 per litre, filling the same tank cost R1,065,” it said.
Petrol prices moderated between April and May, edging lower by 0.7%. Despite this decline, petrol is almost 27% more expensive than it was in May 2021, StatsSA said.
Cooking oil prices continue to soar
During this period, prices for food and NAB jumped by 2.1% between April and May, representing the largest monthly increase since February 2016 when the monthly rise was also 2.1%. At that time, the country was experiencing a severe drought.
“The oils and fats product group continues to witness sustained levels of high inflation. The annual rate was 26.9% in May, representing the 17th month that the rate has been above 10% (since December 2020). Prices jumped by 10.1% between April and May, representing the first time since 1997 that the monthly rate was above 10%.
“Sunflower oil, the product with the highest weight in the oils and fats group, is almost 40% more expensive than it was a year ago. Prices jumped by 16.1% between April and May,” said Stats SA.
The monthly rate for bread and cereals was 3.4%, taking the annual rate to 8.4%. Maize meal recorded a monthly increase of 5.1% and a loaf of white bread was 3.7% more expensive.
Stats SA said annual meat inflation remained above the 6% mark since November 2020, with the reading for May 2022 at 9.4%. Prices for individually quick frozen (IQF) chicken portions and stewing beef increased by 13.7% and 12.2%, respectively, in the 12 months to May.
Jeff Schultz, senior economist at BNP Paribas South Africa said that a very big bounce in food prices explains the group’s missed estimates. These jumped a sizable 2.2% month-on-month to 7.8% year-on-year and are clearly now more reflective of the price pressures being seen globally.
He said that fuel was in line with the group’s estimates, though notably public transport prices actually fell – but will likely pick up in July as the public transport industry gears up to raise tariffs in response to record fuel prices.
“A big food price bounce accounted for the bulk of the headline CPI miss in May and will concern the SARB that the risks of more acute imported price inflation are materialising,” said Shultz.
“Inflation looks set to breach 7.0% from June by our estimates. While we already remain well above the sell-side consensus in our expectations for a more frontloaded hiking cycle and on how high inflation peaks, we think the hurdle for a more aggressive 75bp hike next month is now substantially lower post today’s CPI detail.”
Data sourced by research firm Trade Intelligence and the Pietermaritzburg Economic Justice and Dignity Group shows that in May 2022 the price of cooking oil increased +52% year-on-year. Other notable increases include:
- Potatoes +22%;
- Cake flour +13%;
- Samp +12%;
- Bread +10%.
“If we add in other items to make up the average household food basket, it now costs +11.4% more than in May 2021, or in more concrete terms, an additional R473. This takes the cost of the basket to R4,609 per month, a cause for major concern when 70% of households earn under R10,000 per month and still need to cover other expenses,” Trade Intelligence said.
“We have seen high food and fuel prices before – Brent Crude reached a record high of US $133 a barrel in 2008, and the drought of 2016/2017 in many parts of South Africa pushed up food prices locally. However, in 2008 it cost us ‘only’ R7 to buy a US dollar while now it is more than twice that at R16.”
A further breakdown of the data from the Pietermaritzburg Economic Justice and Dignity Group shows that the average basket cost per family size increased as follows over the past year:
- Family of four: R230.56 (7.9%)
- Family of five: R295.83 (8%)
- Family of seven: R408.31 (8%)
The group noted similar increases have impacted commuters, who are paying substantially more for petrol compared to the same period as last year.
“Even just looking back over the last 12 months, it costs R400-R500 more than last year to fill up our cars, and over R3,000 more to fill a truck with diesel. It is not difficult to see that such increases will be very difficult to absorb along the supply chain,” Trade Intelligence said.
A litre of 95 petrol in June 2021 would have cost a motorist R17.13. In June 2022, this has increased by 34% to R24.17. However, this fails to take into account the government’s intervention to lower fuel costs which have effectively reduced the cost of petrol by a further R1.50 for the month.
A 45-litre tank of petrol that would have cost R771 last year, will now set you back just over R1,088 – adding over R317 to the bill.
This significant increase has been largely outside South Africa’s control, with global oil prices being pushed up by Russia’s invasion of Ukraine, and the rand’s weakness against a resurgent dollar – the other major component of local fuel prices – being largely at the mercy of global market trends.
|Tank size||95 unleaded (June 2021)||95 unleaded (June 2022)||93 unleaded (June 2021)||93 unleaded (June 2022)|
|45 litres||R770.85||R1 087.65||R760.95||R1 077.30|
|60 litres||R1 027.80||R1 450.20||R1 014.60||R1 436.40|
|80 litres||R1 370.40||R1 933.60||R1 352.80||R1 915.20|
Energy regulator Nersa granted Eskom a 9.6% increase in tariffs for direct customers, effective April 2022, with another municipal electricity tariff increase of 7.47% taking effect in July 2022.
The price hikes take the average electricity tariff in South Africa from just over R1.33 per kWh to around R1.46. The average reflects the national average – urban customers who consume power in higher blocks will pay significantly more than this.
Mpumalanga has the highest electricity and energy inflation at 15.3%, followed by Gauteng at 14.8%. The Northern Cape has the lowest inflationary pressure at 11.1% – however, this remains above headline inflation.
How much more you will be paying exactly is dependent on what type of electricity customer you are. Eskom has published its fee adjustments for 2022/23 and has included a fee calculator and comparison tool.
An urban resident using around 200 kWh per month in Gauteng would see their monthly power bill of R550 increase to R600.
Eskom said the average home in South Africa uses 30 kWh a day or 900 kWh a month. This would have cost a household R2,290 in June 2021 and now costs R2,487 per month – an increase of 8.6%.