South Africa’s Consumer Price Inflation has continued its upward trajectory. Figures released by Statistics South Africa show annual Inflation is up 7.8% in July 2022 from 7.4 % in June 2022. The consumer price index increased by 1.5 % in July 2022.
Inflation has accelerated to record levels, hitting a 13-year high of 7.8 % in July 2022. This was better than market expectations, which had predicted an increase of 8 %.
Stats SA says inflation acceleration is being pushed by food and transport costs which increased by 25% year-on-year and contributed 3.4 % points to the COI basket.
Nedbank Economist, Nicky Weimar, who was presenting at the Economist of Year event earlier says inflation acceleration will keep economic growth at bay.
“So overall when we look at GDP we are expecting growth this year of about 1.7 % and then next year we do expect things to slow down quite significantly as the pressure in this year’s acceleration in inflation. The increase in interest rates slowly starts to weigh on consumers and probably led to slower growth. But at this point we are not seeing any dramatic collapse for South Africa; we are not seeing recession in the mix,” says Weimar.
Data shows inflation pressures coming from food and non-alcoholic beverages, housing, and utilities. Food and non-alcoholic beverages increased by 9.7% year-on-year and contributed 1.7% points to the total CPI annual rate. FNB senior economist, Koketso Mano says inflation will likely remain elevated above six percent until the end of this year.
“Electricity prices were up 7.4% month-on-month and together with the changes to other utilities and fuel cost increases; this explains the increases in administrative prices to 19 percent in July. Fuel price pressures have moderated since July and at the start of August petrol prices were cut by over One Rand per litre and 22 days into the month the over recovery was seating at two rands per litre indicating that another cut is possible in September,” says Mano.
Meanwhile, the Competition Commission released its essential food pricing monitoring report this week and highlighted the impact of high prices along the sunflower and oil value chain on consumers and inflation.
“This creates risks to opportunistic price increases above cost increases during periods of inflation. It also highlights the reductions have not been passed on to the consumer in terms of prices. There is also an increase in terms of margarine prices of six percent that happened between January 2022 to June 2022,” says Competition Commission spokesperson Sipho Ngweme.
