More inflation relief for South Africa

 ·23 Aug 2023

South Africa recorded another year-on-year decline for headline inflation July, providing some relief for consumers.

According to Stats SA, annual consumer price inflation (CPI) dropped from 5.4% in June to 4.7% in July.

This is the lowest reading since the 4.6% in July 2021.

Inflation is now close to the midpoint South African Reserve Bank’s inflation target range of 3% to 6%.

On a month-to-month basis, prices increased 0.9% from June to July, marking an increase from the monthly rise of 0.2% between May and June.

Fuel keeping it down

Despite previously being a major upward driver of inflation, the transport category pushed overall inflation down in July, Stats SA said.

Fuel prices were largely to blame for inflation reaching a 13-year high of 7.8% in July 2022, with transport contributing 44% (3.4% percentage points) to the overall inflation rate.

However, since peaking in July 2022, fuel prices have begun to ease, dropping from R26.74 per litre of inland 95-octane petrol in July 2022 to R22.46 per litre in July 2023.

The annual rate for fuel was -16.8% in July 2023, which dragged the transport category down into negative territory for the first time since January 2021.

Food decline

Food inflation also eased in July, with the annual rate for food & non-alcoholic beverages (NAB) category dropping from 11.0% in June to 9.9% in July.

Annual inflation for bread and cereals also dropped from 15.5% in June to 13.1% in July, as the prices of Maize Meal, a crucial staple in many South African diets, dropped by 0.7%.

Annual meat inflation also eased to 5.1% – the fifth consecutive month of decline.

Notable increases

However, not all food categories saw a drop. For instance, milk, eggs & cheese increased from 14.1% in June to 14.4% in July.

“Cheese prices are rising sharply, with large annual increases recorded for cheese spread (up 19.5%), cheddar cheese (up 19.0%) and Gouda cheese (up 16,6%),” Stats SA said.

Annual inflation for hot beverages also grew from 8.7% in June to 9.0% in July, with the rate for instant coffee growing from 10.3% to 11.5%.

“If it wasn’t bad enough for coffee drinkers to fork out more for their caffeine fix, sugar prices were up too. White sugar is, on average, 20.8% and brown sugar 22.8% more expensive than a year ago. The sugar, sweets & desserts category recorded an annual inflation rate of 18.7%, up from 16.4% in June. This is the highest reading for this category since May 2017,” Stats SA said.

Inflation for alcoholic beverages also shot up from 6.9% in June to 7.8% in July – annual wine and beer inflation reached 9.8% and 7.4%, respectively.

Stats SA also surveys municipal tariffs every year in July and August and noted that housing and utility costs increased by 2.8% between June and July.

“On average, households are paying 14.5% more for electricity. Water tariffs increased by 9.6% and property rates by 2.9%. A final picture will emerge in the August consumer price index (CPI) release with the completion of the survey,” Stats SA said.

The biggest yearly and monthly changes can be seen below:

Read: Great news for take-home pay in South Africa

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