Good news for South Africa as inflation eases dramatically

 ·19 Jul 2023

Stats SA has published the latest inflation figures for South Africa, showing that headline inflation cooled from 6.3% in May to 5.4% in June.

June’s inflation figure is now back below the upper limit (6%) of the South African Reserve Bank’s monetary policy target range.

The rate in June is the lowest reading since October 2021, when the rate was 5.0%.

The statistic body added that the 0.9 percentage point drop in headline inflation between May and June is the biggest drop since May 2020.

Of the 12 main categories covered by the consumer price index (CPI), six saw a drop in annual inflation, five saw an increase, and one remained unchanged.

Annual goods inflation dropped from 8.0% in May to 6.3% in June, whilst services inflation dropped slightly from 4.6% in May to 4.5% in June.

Core inflation (inflation excluding food and fuel) was also slightly lower at 5.0%.

Some good news for food

Annual inflation for food and non-alcoholic beverages (NAB) slowed for the third month in a row, dropping from 11.9% in May to 11.0% in June. However, food inflation remains well outside the target range and is still adding pressure to household spending.

Most food and NAB components recorded lower inflation rates in June – however, some climbed even higher.

Sugar, sweets and desserts climbed from 11.9% in May to 16.4% in June – the highest reading for the category since June 2017.

Stats SA noted annual increases for brown sugar (up 17.4%), white sugar (up 17.1%) and chocolate slabs (up 16.2%).

In addition, the annual inflation rate for alcoholic beverages and tobacco increased from 5.9% in May to 6.1% in June.

Wine inflation grew from 9.1% in May to 9.4% in June, whilst beer inflation also rose from 4.7% to 5.5%.

Actual rents jumped from 2.5% in March to 2.7% in June, whilst the annual rate for imputed rents increased from 2.7% to 2.9% over the same period.

The CPI also incorporated the most recent quarterly survey of housing rents.

On a quarter-on-quarter basis, imputed rents rose by 1,2% between March 2023 and June 2023, which is the largest quarterly increase since September 2018, when the rate was also 1.2%.

Notable Declines

Prices for oils and fats decreased for the tenth successive month, with the index dropping by 9.5% in the 12 months to June.

The average price of a 750 ml bottle of sunflower oil dropped from the R43.97 price tag in June 2022 to R35.57 in June 2023.

Annual transport inflation also significantly dropped from 7.0% in May to 1.8% in June, which was mainly due to the softer fuel prices.

The fuel index also declined by 8.3% when comparing in June 2023 compared to June 2022, with the monthly change also seeing a 3.1% decrease.

Read: South Africa’s outlook stable: Fitch

Show comments
Subscribe to our daily newsletter