Consumer inflation ticks up, but food inflation slows further
By Tammy Foyn - Sep 20th 2017, 11:15
Consumer inflation picked up as expected in August, as higher fuel prices bit.
The consumer price index (CPI) rose 4.8% in August from a year earlier, Statistics SA said on Wednesday.
That compares with a 4.6% year-on-year increase in July and expectations that inflation would pick up to 4.9%.
CPI inflation, on which the Reserve Bank bases its 3%-6% inflation target, has been within that band since April this year.
Tamer inflation enabled the Bank to cut interest rates in July for the first time in five years to offer some stimulus to SA’s moribund economy, and a second cut is widely expected when the Bank announces the outcome of its three-day monetary policy committee (MPC) meeting on Thursday.
Wednesday’s numbers will have little bearing on that decision, though, as the Bank bases its decisions on the outlook for inflation, rather than historical data.
One of the main factors in moderating inflation this year has been slowing food price increases. Food inflation spent the better part of a year in double digits, as a severe drought affected production across SA.
The alleviation of the drought in most areas — apart from the Western Cape — has helped food inflation to fall back into single digits, and it has been steady near 7% in the past few months.
It was expected to continue to moderate in August, assisted by a notable decline in grain prices, and this was borne out.
Prices for both food, and for food and non-alcoholic beverages, rose 5.7% from a year earlier, after 6.8% increases in July for both categories.
Breads and cereals prices fell 1.2% in August from a year earlier — after a 2% increase in July.
Electricity and other fuels were 2.1% than in August 2016, and unchanged from July, when Eskom tariff increases took effect.
This category does not refer to transport fuels, which were up 5.7% year on year in August, after a 3.6% fall in July.
The CPI ticked up 0.1% month on month in August, after a 0.3% increase in July from June.
Producer inflation has also been slowing, and in July the producer price index (PPI) for final manufactured goods — the headline figure — rose 3.6% from a year earlier, after a 4% increase in June.© BusinessLIVE MMXVII
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