Consumer inflation surges to a 13-year high in South Africa

Annual consumer inflation jumped to 7,4% in June from 6,5% in May, mainly driven by rising transport and food prices.

The June rate is the highest reading since May 2009 (8,0%) when the economy was facing the headwind of currency depreciation during the global financial crisis.

The Consumer Price Index (CPI) increased by 1,1% between May and June. The annual rate rose during 2021 and continued its upward trajectory in the first half of 2022. Many countries around the globe have experienced rising inflation in recent months, making it a hot topic for debate, particularly in the area of monetary policy.

Prices of food and non-alcoholic beverages (NAB) increased by 8,6% year-on-year in June. This is the highest annual rate for food and NAB since March 2017 when the country was recovering from a severe drought. The main groups contributing to high food inflation in June 2022 were bread and cereals, meat, and oils and fats.

Bread and cereal products recorded an annual rate of 11,2% in June, up from 8,4% in May. The monthly increase was 2,6% with notable price rises for maize meal (5,2%), brown bread (3,2%), and macaroni (3,0%).

Meat prices increased by 9,5% in the 12 months to June, slightly higher than 9,4% recorded in May. Large price increases are widespread across the group, with polony recording the highest annual increase (19,0%).

The index for oils and fats registered an annual increase of 32,5% compared with 26,9% in May. This product group has seen sustained levels of high inflation, with annual increases above 20% since May 2021.

Transport goods and services recorded an average annual price increase of 20,0% and a monthly rise of 4,2%. Fuel prices were up by 45,3% in June, representing the largest annual increase for fuel since the current CPI series began in 2009.

Fuel is not the only component in the transport product group experiencing significant price increases. Used vehicle prices have climbed since May 2020 (recording an annual rate of -2,9%) to reach 11,1% in June 2022. Public transport prices increased by 14,3% from June 2021 and 4,3% from May 2022. Monthly increases were recorded for taxi fares (2,7%), airfares (7,1%) and long-distance buses (11,7%).

The June CPI incorporates the most recent results of Stats SA’s rental survey that is used to calculate changes in actual and imputed rental indices. Actual rentals increased by 0,8% and imputed rentals by 1,0% in the second quarter of 2022 compared with the first quarter of 2022. These increases are the highest for these categories since June 2019 when actual rentals increased by 0,9% and imputed rentals by 1,1% between the first and second quarters.