Economists see inflation peaking

2008-09-23 00:00

Consumer inflation in August 2008 may have finally reached the long-awaited peak that beleaguered consumers and analysts have been hoping for, according to certain economists.

CPIX — inflation excluding interest rates on mortgage bonds — was 13,6% in July 2008.

The inflation bug in August was driven by higher electricity tariffs, high food prices, as well as more pricey household consumables and personal care items, according to the latest consumer inflation data released yesterday.

Pietermaritzburg’s headline inflation rate (CPI), the highest in the country, rose to 16,8% in August 2008, while Durban’s headline inflation rate came in at 14,6% .

The city’s headline inflation rate in July 2008 was 16,3%.

The rate for KwaZulu-Natal stands at 14,2%.

Food inflation in Pietermaritzburg grew to 20,2% in August 2008.

Food inflation in Durban and Pinetown remained stubbornly high at 22,2% (KZN: 20,5%).

South Africa’s headline annual inflation rate (CPI) in August 2008 was 13,7%.

Both Efficient Group economist Doret Els and Nedbank’s Group Economic Unit believe that consumer inflation may indeed have peaked in August 2008.

However, Standard Bank economist, Danelee van Dyk noted that CPIX inflation is expected to deteriorate further, to 14% year on year in September 2008.

“Food inflation rose by a higher-than-expected two percent month on month in August.

“This took the annual rise in CPIX to 19,2% year on year from 18,5% year on year in July.

“The culprit behind this number was unprocessed foods, which rose by 2,7% month on month, with vegetable prices rising by three percent month on month.

“Grain products and meat prices also contributed heftily to the rise in processed food, having risen by 3,1% and 1,9% month on month respectively,” added Van Dyk.

Els added that electricity prices continued to push fuel and power costs higher, showing a painful increase of 28,2% year on year.

Nedbank’s Group Economic Unit said inflation is expected to decline in the next few months, due to falling fuel prices and the introduction of the new inflation methodology.

However, it warned that inflation may prove “stickier” in 2009.

“We do not foresee any further increases in interest rates this year and expect the Reserve Bank to keep rates on hold before the new inflation basket is introduced next year,” predicted Els.

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