By Oyisa George
From 5,4% in June, annual consumer inflation fell to 4,7% in July. The rate was 4,6% in July 2021, making this the lowest number since then. Between June and July 2023, consumer prices rose by a median of 0.9%. As a result, a monthly increase of 0.2% was noted in both May and June according to Statistics SA.
The transport category, which had previously been a significant inflationary force, assisted in bringing down total inflation in July. The primary factor driving up total inflation in 2021 and 2022 was transportation. In July 2022, the headline rate of consumer inflation reached a 13-year high of 7,8%, with transport accounting for 44% (3,4 percentage points) of the increase.
The cost of fuel was a major factor. 95-octane fuel was priced at R17,39 per litre in July 2021, but it rose quickly to a record high of R26,74 per litre in July 2022.1 petrol had such an influence that in July 2022, South Africa’s inflation rate would have been 5,5% rather than 7,8% if petrol costs remained the same.
Fuel prices continued to decline after reaching a peak in July 2022. In July 2023, the price of inland 95-octane fuel dropped to R22,46 per litre. This equals an R214 savings for a car with a 50-liter gasoline capacity. The downward pressure that transport has on consumer inflation was lessened by the drop in fuel costs. In July 2023, the yearly rate for gasoline was negative at -16,8%. For the first time since January 2021, this caused the transport category to decline and into the red. Additionally, in 2020, from April to June and once again from October to December, the annual transport inflation rate was negative.
Statistic SA mentioned that Food inflation has also decreased, but not as swiftly as transportation. In July, the annual rate for the category of food and non-alcoholic drinks (NAB) was 9,9%, down from June’s reading of 11,0%. From 15,5% in June, annual inflation for bread and grains decreased to 13,1%. An essential product, maize meal, was less expensive in July compared to June, with prices dropping by an average of 0,7%. The rate of annual meat inflation eased to 5.1% for the sixth consecutive month.
The annual inflation rate for the sugar, sweets, and desserts category, which had increased from 16.4% in June to 18.7%, was the highest since May 2017.
Between June and July, the housing and utility index rose by 2.8%. Households are paying 14,5% extra on average for power. Property rates rose by 2,9%, while water rates rose by 9,6%.
Annabel Bishop, the chief economist at Investec advised that the CPI decline towards the centre of the SARB’s inflation goal range was probably just transitory.
“The CPI inflation rate is likely to lift somewhat in August on base effects as July 2022 proved to be the peak for the inflation trajectory currently in SA, says Bishop in her interview with IOL.