Petrol prices and panic sends inflation shooting up in South Africa

 ·22 Nov 2023

Inflation in South Africa shot up again in October 2023, rising to 5.9% from 5.4% in September – higher than market expectations of between 5.4% and 5.7%.

According to Stats SA, consumer inflation increased for a third consecutive month in October, with prices increasing on average by 0.9% between September and October – the highest monthly rise in three months.

This marks a negative turn for consumer prices in the country, although longer-term expectations are that the headline rate will return to a more stable mid-point of the Reserve Bank’s target range (3%-6%) over time.

The hike in inflation was largely driven by higher food price inflation – dominated by panic buying related to eggs and chicken products – and increased transport costs linked to the October petrol and diesel price hikes, while health, hotels and restaurants also contributed to the increase.

Inflation for food and non-alcoholic beverages (NAB) accelerated for a second consecutive month, rising to 8.7% in October from 8.1% in September and 8.0% in August.

The 1.5% monthly rise was the highest since January this year (1.8%).

The annual rate for bread & cereals slowed to 8.8% from 9.2% in September. Maize meal prices declined by 1.3% between September and October, lowering the annual rate for this staple down to 8.6%.

Rice, on the other hand, was 20.8% more expensive than it was a year ago. The average price of a kilogram of rice increased from R22.48 to R28.59 over this period.

Just in time for the summer braai season, meat inflation continued to slow. The annual rate for meat moderated to 3.4% in October from 3.8% in September. Meat inflation has been on a general downward trajectory since the recent peak of 11.4% in February.

Egg inflation jumps in October

Milk, eggs & cheese inflation quickened to 12.4% from 11.2% in September.

Egg prices rose sharply in October, with the price index increasing by 13.4% from September. This pushed the annual rate to 24.4%.

Prices for poultry-related products, including eggs, have come under increased upward pressure due to the outbreak of avian flu. The culling of millions of chickens resulted in market shortages and panic buying from anxious consumers.

Interestingly, price increases vary across the country.

Western Cape consumers felt the most pain, with a tray of six eggs rising by R6.42 from an average price of R17.71 in October 2022 to R24.13 in October 2023.

Gauteng consumers had to fork out an additional R4.81 over the same period. At an average price of R24.32, a tray of six eggs was the most expensive in Gauteng during October.

Of the seven provinces surveyed, Free State bucked the trend. Breakfast in that province became slightly cheaper, with the average price for a tray of six eggs declining from R19.33 in October 2022 to R18.38 in October 2023.

Potato problems

With the media spotlight on eggs, potatoes have escaped some attention.

Potatoes recorded a price increase of 21.2% between September and October. This took the annual rate for the vegetable to 64.6%. The average price for potatoes increased by R8.89 from R13.93 per kilogram in October 2022 to R22.82 per kilogram in October 2023.

Inflation for vegetables and fruit is typically volatile. The annual rate for vegetables was 23.6% in October, the highest reading since December 2007 when the rate was 23.8%. While potatoes recorded the largest monthly increase, sweet potatoes were up 16.4%, tomatoes by 15.2% and pumpkin by 11.1%.

The annual rate for fruit was 8.5%. Banana prices increased by 33.0% in the 12 months to October. The average price of bananas in October 2023 was R21.20 per kilogram, up from R14.92 in October 2022.

Petrol price pain

Transport inflation quickened to 7.4% from 4.2% in September. The rise was mainly due to a 6.5% monthly increase in the fuel price, taking the annual rate to 11.2% from 1.5% in September.

The price of inland 95-octane petrol rose to R25.68 per litre in October from R24.54 per litre in September. This is the second-highest price for petrol ever – just below the record R26.74 charged in July 2022.

Vehicle inflation, which includes prices of new and used motor cars, eased to 7.8% from 8.4% in September.

Restaurants and hotels registered an annual price increase of 6.3%. Menu prices are 6.4% higher than this time last year.

Hotel rates increased by 9.7% between September and October, taking the annual rate to 6.1%.

The graphs below show the products that recorded the largest price increases in October.

Read: Rand takes a hit on shaky interest rate expectations

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