Inflation eases to 4.9% in June, slightly above the Reserve Bank midway point

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Statistician-general Risenga Maluleke said fuel recorded a third month of double-digit inflation. Photo: File
Statistician-general Risenga Maluleke said fuel recorded a third month of double-digit inflation. Photo: File

BUSINESS


Annual consumer inflation eased to 4.9% in June after a 30-month high of 5.2% in May and 4.4% in April.

According to the Stats SA June consumer price index (CPI) outcome released on Wednesday, the monthly increase in CPI was 0.2% – up from 0.1% in May, but lower than the 0.5% rise recorded between May and June 2020.

This is in line with analysts’ expectations.

FNB chief economist Mamello Matikinca-Ngwenya said FNB expected inflation to moderate to 4.8% in June.

The Bureau for Economic Research (BER) is to publish its inflation expectations for the second quarter of 2021 on Thursday. The BER expects inflation to be 4.2% for 2022, and 4.4% for 2023.

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BER economMany view savings as more importantist Lisette IJssel De Schepper said they expected inflation to be at 4.6% over the next five years, quite close to the midpoint of the SA Reserve Bank’s inflation target range. She added that analysts and trade unions expected inflation to be 4.4% over the next five years, while the businesses projected rate was 4.9%. Salaries, on average, are expected to grow by 4.3% in 2021 and 4.7% in 2022.

Stats SA chief director for price statistics Patrick Kelly said if annual consumer inflation is recalculated without including food and non-alcoholic beverages and fuel, inflation comes to 3.4% in June.

“This is well below the 4.9% headline rate [for June], indicating that these products [food, non-alcoholic beverages and fuel] are important drivers of inflation,” said Kelly.

Statistician-general Risenga Maluleke said fuel recorded a third month of double-digit inflation, while prices of oils and fats, as well as those of accommodation, continued to surge.

Fuel costs

Maluleke said fuel prices increased by 27.5% in June, compared with the same month last year. “This is lower than the May rise of 37.4%, but higher than the reading in April of 21.4%.”

These relatively high rates come off a low base recorded during the second quarter of 2020, when fuel prices were depressed.

The price of inland 95-octane petrol dropped during the Covid-19 lockdown last year, falling to R12.22 per litre in May 2020, the lowest reading since September 2016 when it cost R12.17.

According to reports, the fuel price experienced a rebound in June 2020 to R13.40, eventually rising to R17.32 in April 2021, before falling slightly to R17.13 per litre in June this year.

READ: Sharp price increases loom

“On a month-on-month basis, fuel prices dropped by 0.2% between May and June this year. The price of inland 95-octane petrol edged lower by 10c a litre in the month. Diesel prices, on the other hand, increased by an average of 0.7%,” said Maluleke, adding that diesel recorded an annual increase of 25.5% in June, lagging behind petrol’s rise of 28.2%.

“The average price for a litre of diesel in June was R16.31 per litre,” he said.

Soaring food prices

Kelly said the annual food and non-alcohol beverage inflation was unchanged from May, remaining steady at 6.7% in June. “But there was an average price increase of 0.2% between May and June.”

The three food groups that registered the highest annual increases in June were oils and fats, meat and sugar, as well as sweets and desserts.

“Oils and fats prices have been steadily increasing since February 2019. This is when an annual rise of 1.2% was recorded. In June this year, the annual increase was 21.6%. Cooking oil products in particular have recorded sharp increases,” said Kelly. In June 2020, the average price of a 750ml bottle of sunflower oil was R20.99, rising to R29.45 in June 2021.

On a month-on-month basis, fuel prices dropped by 0.2% between May and June this year
Statistician-general Risenga Maluleke

The CPI release shows that meat inflation has continued to accelerate, reaching an annual rate of 8.6% from a 12-month low of 4.1% in August 2020. Lamb prices increased by 10.9%, stewing beef by 16.7% and pork by 10.5%.

“The sugar, sweets and desserts index rose by an annual rate of 7.2% in June 2021, lower than the 8.7% recorded in May 2021. This category has seen price rises slowing from a high of 9.7% in October 2020,” said Kelly.

Stats SA also reported that accommodation inflation has increased.

It records housing rentals every quarter, with the latest survey taking place in June. This component accounts for 17% of the inflation basket and includes actual and imputed rentals.

According to the statistician-general, actual rentals increased by 0.4% and imputed rentals by 0.6% in June. This is after both actual and imputed rentals dipped by 0.2% March 2021.

“In June, actual rentals increased for houses and townhouses. Rentals for flats, however, declined by a marginal 0.1%,” said Maluleke.


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