KZN inflation is the country’s highest

2008-04-05 00:00

Rates in PMB and Durban

KZN inflation now significantly outstrips national inflation.

Inflation in Pietermaritzburg now sits at 11,5%, well above the national urban and metropolitan rate of 9,8%, while Durban sits at 10,4% and the rural areas of KZN come in at a hefty 12,4%.

The year-on-year rate of escalation in the cost of living in Pietermaritzburg during February 2008 is the highest rate out of all major urban and metropolitan areas in South Africa.

The annual change in consumer inflation excluding interest rates on mortgage bonds (CPIX), the monetary policy inflation target measure, was up 0,6% to 9,4% in February 2008.

This is the highest CPIX in five years.

Another rate hike

The latest figures have prompted warnings from economists and other analysts that the SA Reserve Bank’s Monetary Policy Committee (MPC) will almost certainly hike interest rates yet again when it meets next week.

The bank’s target range is three to six percent.

Food inflation, up 14,3% year on year, and transport inflation, up 13,6% year on year, were the main drivers on a national level.

Food rockets

Some food items were particularly more expensive on a year-on-year basis in February 2008.

One of the main culprits was the price of fats and oils, which rose by a devastating 41,5% year on year in February.

In addition, the price of grain products increased by 20,7%, while the price of vegetables, milk, cheese and eggs rose by more than 20% compared to February 2007.

More pain ahead

Nedbank’s group economic unit has noted that the short-term outlook for inflation remains bleak.

"The unit’s preliminary forecast for CPIX inflation in March is an even higher 9,8% year on year … due to the combined effect of higher food prices and higher tobacco and alcohol prices following increases in excise duties, higher transport costs resulting from the … petrol price hike in early March, higher education costs and higher household operation costs reflecting increases in domestic worker wages.

"Thereafter, CPIX inflation should move slowly lower to end the year at around 6,7% year on year."

Consumers, however, will take little solace from the expectation that inflation will cool off toward the end of the year, especially given the fact that the petrol price will rise even further in April.

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