Inflation beats expectations at 6.6%

2014-06-18 11:34

The headline inflation rate last month was 6.6%, according to Statistics South Africa’s (Stats SA) latest figures released this morning.

That is the peak level which the Reserve Bank last month predicted would only be reached late in the year, making forecasts about the year’s average inflation look optimistic.

Inflation last month was the highest recorded since July 2009 and well above April’s 6.1%.

The major reason for the high inflation is still the petrol price, which pushed transport inflation to 8.9%, contributing 1.5 of the 6.6 percentage points.

Food inflation also stayed high with food and non-alcoholic beverages clocking up an inflation rate of 8.8%. That accounts for 1.3 percentage points.

Housing inflation contributed another 1.4 points, driven up by escalating water and electricity costs.

The other standout figure was the cost of insurance classified under “miscellaneous goods and services”.

This category contributed one point to the rate, which almost entirely reflects the 7.4% increase in insurance prices.

The inflation spike in May may lead to worse expectations.

In its Quarterly Bulletin this month, the Reserve Bank expected inflation to average 6.1% this year and next year before falling back below the target threshold of 6% in 2016.

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