Photo: Delwyn Verasamy/M&G
South Africa's consumer price inflation fell to 4.4 percent year-on-year in August from 4.6 percent in July, the lowest level in more than three years, providing the basis for the South African Reserve Bank to cut interest rates this week.
Data released by Statistics South Africa on Wednesday showed inflation slowed for a third consecutive month in August to its lowest since April 2021 and below the midpoint of the central bank's target range of 3-6%.
Several product groups recorded annual rate declines, particularly transportation, housing, and restaurants and hotels.
Fuel prices have a significant impact on inflation. According to Stats SA, fuel prices continue to trend downwards, dropping for the third consecutive month. The fuel index fell 0.5% month-on-month, bringing the annual rate to 1.8%.
Motorists using 95 octane petrol inland paid 15 cents less per litre in August (R23.11) compared to July (R23.26). Diesel showed a similar trend, with motorists enjoying a fourth consecutive price cut. The average price per litre of diesel was R23.23 in August compared to R23.35 the previous month.
The British Institute for Economic Research had forecast the CPI would slow to 4.5% year-on-year in August, while Nedbank economists expect it to remain stable at 4.6%.
“The downside to the CPI will be offset by food prices, which are expected to start to rise as base effects fade and the effects of the dry weather earlier in the year permeate through to certain food categories,” Nedbank said.
According to Statistics South Africa, inflation rates for food and non-alcoholic beverages, alcoholic drinks and tobacco rose slightly in August. After eight months of a downward trend, annual inflation for food and non-alcoholic beverages rose to 4.7% from 4.5% in July.
Annual increases were recorded for most product groups, including bread and cereals, meat, fish, milk, eggs, cheese, oils and fats and vegetables. Declines were recorded for fruit, sugar, sweets and desserts and both hot and cold drinks.
Agricultural economist Wandile Silhobo said: Mail & Guardian Last month, it forecast food inflation would rise slightly due to higher prices for bread, cereals and meat products.
Statistics South Africa released August inflation figures a day before the central bank's monetary policy committee concludes a three-day meeting, with economists expecting the bank to cut its benchmark repo rate by 25 basis points to 8 percent.
“The South African Central Bank [South African Reserve Bank] “A decision to bring forward the rate cut and reduce the repo rate by 50 basis points is also possible, but this is a highly unlikely scenario, given that inflation has fallen significantly in recent months,” the economic institute said.
