Bad news for South Africa as prices climb even higher
Annual consumer price inflation was 7.0% in February 2023, up from 6.9% in January 2023, as food price inflation climbed even higher.
The consumer price index increased by 0.7% month-on-month in February 2023.
According to Stats SA, the main contributors to the 7.0% annual inflation rate were food and non-alcoholic beverages; housing and utilities; transport; and miscellaneous goods and services.
Food and non-alcoholic beverages increased by 13.6% year-on-year, and contributed 2.3 percentage points to the total CPI annual rate of 7.0%.
Housing and utilities increased by 4.0% year-on-year, and contributed 1.0 percentage point.
Transport increased by 9.9% year-on-year, and contributed 1.4 percentage points.
Miscellaneous goods and services increased by 6.1% year-on-year, and contributed 0.9 of a percentage point.
In February, the annual inflation rate for goods remained unchanged at 9.5%; and for services it was 4.6% up from 4.3% in January.
Worryingly, core inflation is also ticking higher, now sitting at 5.2% (January: 4.9%). Core inflation represents inflation excluding food and non-alcoholic beverages, fuel and energy.
An increase in core inflation means that prices are rising higher across the board, excluding the shocks from food and energy, which are being impacted by global factors.
Rising core inflation is also a signal to the South African Reserve Bank that interest rate hikes may not be curbing inflation as intended and could see further hikes coming.
Economists at Absa noted earlier this month that higher core inflation was expected and cautioned against seeing the number as an indication of broadening inflationary pressures.
“The data should be watched more closely to distinguish between widening inflationary pressure and idiosyncratic factors related to medical-health insurance,” it said.
According to Stats SA, medical services (doctors, dentists and hospital ward fees) are surveyed once a year in February.
Prices here increased by 5.3% in February 2023 compared with the 5.0% rise recorded in February 2022. The index for health insurance increased by 4.4% between January and February as several companies implemented annual premium increases.
Food prices shoot up
Following the increase in food price inflation for January 2023, food price inflation in February continued to climb, adding even more pressure to strained households.
Prices for food and non-alcoholic beverages increased by 13.6% over the past 12 months, up from 13.4% recorded in January.
The reading in February is the highest since April 2009, which was also 13.6%.
Annual inflation for bread & cereals was 20.5%, slightly lower than January’s 21.8%. Maize meal, an important staple, continues to see high rates of inflation. Its price index increased by 2.2% between January and February, taking the annual rate to 34.7%.
Notable monthly price increases were also recorded for rusks (up 6.8%), macaroni (up 4.4%) and savoury biscuits (up 4,.0%).
Meat inflation continues to accelerate, reaching 11.4% in February from 11.2% in January. This is the highest annual increase for meat since February 2018 (also 11.4%). The monthly rate, however, dropped to 0.2% from 2.6% in January. This was the lowest monthly increase for meat since February 2022, when there was no change.
Prices for milk, eggs and cheese increased by 12.3% in the twelve months to February, up from 10.9% in January. Notable annual increases were recorded for cheddar cheese (up 15.2%), feta cheese (up 14.9%), custard (up 14.9%), fresh low-fat milk (up 14.7%) and long-life full cream milk (up 14.3%).
Annual inflation for the oils and fats category slowed for a sixth consecutive month, edging lower to 16.7%, the lowest reading since April 2021 (also 16.7%).
The category ‘other food’ saw its annual inflation rate climb from 7.7% in June 2022 to 15,0% in February 2023. The monthly rate in February was 2.3%. Products in this category recording high monthly price increases include baby milk formula (up 7.2%), baby cereal (up 4.6%), baking powder (up 2.8%) and tomato sauce (up 2.5%).
Cold beverages registered an annual price increase of 8.5%, with a monthly rise of 2.7%. Monthly increases were recorded for fruit juices (up 4.0%), fizzy drinks in a can (3.3%) and fizzy drinks in a bottle (up 3.1%).
Fuel prices increased by a relatively modest 0.9% between January and February. The annual rate slowed to 10.9% ‒ the lowest reading since March 2021 (2.4%).
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