Inflation: KZN once again above average

2008-06-25 00:00

THE latest consumer inflation data released yesterday has confirmed that widespread inflation is now rampant across a variety of goods and services.

The figures revealed that CPIX — inflation excluding interest rates on mortgage bonds — accelerated to 10,9% in May 2008, half a percentage point higher than the April 2008 figure.

This is the fourteenth consecutive month that CPIX inflation has exceeded the SA Reserve Bank’s (Sarb’s) target range of three- to six- percent.

CPI or headline inflation — which includes interest rates on mortgage bonds — came in at 11,7% last month.

It has been yet another above-average inflation month for Pietermaritzburg.

The city’s headline inflation rate (CPI) came in at a shocking 13,8% in May 2008, markedly above other metropolitan areas in South Africa.

Food inflation in the city grew to 17,5% in May 2008.

Headline inflation in Durban and Pinetown came in at a less severe 12,6% in May 2008, although this area was again rocked by a high food inflation rate of 20,2% — over three percentage points higher than the national food inflation average.

Overall, the figures came in slightly above economists’ expectations and they have warned that a further half- percent interest rate hike is almost a certainty in August.

Consumers have not only been rocked by major food and fuel price hikes, but also by price hikes in items such as personal-care goods, household items and utilities.

“Inflation in these [regularly purchased items] categories is almost triple the inflation rate of discretionary purchases, such as vehicles, furniture, household appliances, services of domestic workers … denoting that inflation has become more widespread among consumer goods,” said Standard Bank’s group economic unit.

Dynamic Wealth chief economist, Professor Chris Harmse, said retailers are increasingly “off-loading” their costs on to consumers.

He expressed concern over the continued acceleration in interest rate-sensitive inflation, which is now firmly above six percent.

However, Nedbank’s group economic unit argued that weaker demand for durable goods is limiting the extent to which retailers can increase prices.

The Rand Merchant Bank financial market research team expressed concern over the medium-term food inflation outlook due to the recent uptick in both international and domestic food prices.

The CPI for food increased to 17% in May 2008, rising 1,3 percentage points in just a month, while the CPI for transport in May 2008 increased to 16,7% from 15,6% in April 2008.

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