South Africa’s annual consumer inflation lost momentum in September, falling from 4.3% in August to 4.1%. The inflation rate has risen between 4% and 5% since December last year and has been below 4.5% over the past three months. More significantly, since April 2017, it has fallen below the boundary of the South African Reserve Bank
South Africa’s annual consumer inflation lost momentum in September, falling from 4.3% in August to 4.1%.
The inflation rate has risen between 4% and 5% since December last year and has been below 4.5% over the past three months. More significantly, since April 2017, it has remained below the limit of the South African Reserve Bank’s (SARB) monetary policy of 6%. Food prices rose 3.7%, slightly down from the 3.8% in August.
Due to poor harvests, the price of bread and cereals has risen significantly over the past 12 months. Electricity was 11.8% more expensive, while wine prices have been steadily rising since the drought of 2016. The 2019 harvest in particular is the lowest since 2005 and the strong export demand further limits local availability.
The product groups with the biggest negative annual rates were telecommunications equipment and package holidays. The sharp decline in telecommunications equipment, which mainly consists of mobile phones, stems from the fact that the CPI is a constant quality index. In simple terms, this means that the improvement in phone features outweighs the price increases released with new models.
Falling prices in domestic holiday packages can result from the current poor economic conditions. The Western Cape has seen the largest provincial drop in package prices, which is down 9.3% in the last 12 months.
Motorists are closely following the announcements of monthly changes in fuel prices. The price of domestic 95-octane petrol in September was R16.03 per liter, down 5c compared to R16.08 recorded in September 2018
In a Snap Note on Wednesday, TreasuryONE said the pressure was raising the prospects of a rate cut in November, but the cautious nature of the SA Reserve Bank could also mean that the rate remains unchanged. The rand fell 5 cents to the dollar after the announcement, but at 10:30 it traded again at R14.65 against the dollar.