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Wednesday, 22 May 2024 13:09

Consumer inflation eases in April - still remains stubbornly high.

By Lehlohonolo Lehana.

South Africa's consumer price inflation decelerated for a second consecutive month to 5.2% in April from 5.3% in March, data from Statistics South Africa showed on Wednesday.

This was in line with market expectations, which saw CPI coming in relatively flat.

While this is a positive move for inflation, the figure is still some way off from the South African Reserve Bank's (SARB’s) target of 4.5%, and feeds the "higher for longer" narrative on inflation and interest rates.

The central bank has repeatedly noted that it will not move its policy rate lower—heralding a cutting cycle—until inflation is under control and sustainably hitting that target.

Thus, interest rates are likely to remain on hold when the Monetary Policy Committee meets next week after the national elections.

Statistics South Africa announced the latest headline consumer inflation on Wednesday morning.

Patrick Kelly, Chief Director for Price Statistics, said the monthly change in the consumer price index was 0.3% in April - lower than the 0.8% recorded in March.

Kelly said the annual inflation for food and non-alcoholic beverages decreased further from 5,1% in March to 4,7 % in April, representing a fifth consecutive month of decline.

"Most food and non-alcoholic beverages subcategories witnessed softer annual inflation rates, except for vegetables, fruits and hot beverages, on average  vegetable prices increased by 7.4% in the 12 month to April, higher than the 6% increase recorded in March. 

"Vegetable products that recorded higher price increases include potatoes, frozen potato chips, broccoli and beans. The annual rate for fruits rose to 4.5% from 3.3% in March, mainly driven by the higher prices in bananas and apples."

He said bread and cereal inflation continued to slow down, declining for a 12th consecutive month in April.

This means that bread flour, cake flour, ready mix flour, white bread, pasta, savoury biscuits and maizemeal are cheaper now, in comparison to a year ago. 

"Egg inflation recorded its fifth consecutive month of decline after peaking at 39.9% in November 2023, then receding to 25.1% in April 2024," Kelly explained. 

"Except for whiteners, condensed milk, Gouda cheese and fresh cream, most products in the milk, eggs and cheese category recorded lower annual rates in April. This pulled overall inflation for the category down to 8,7% from 10,1% in March."

Kelly said hotels and restaurants also experienced notable price changes in April. 

"The annual rate for restaurants and hotels rose to 7.5% in April from 5.7% in March. Hotel prices jumped by 1.5% between March and April, taking the annual rate for hotels to 10.4%.

"Fuel prices increased by 1.9% monthly, pushing the annual rate to 9.0%. Inland 95-octane petrol was R25,12 per litre in April 2024, up from R22,97 in April 2023."