By Lehlohonolo Lehana.
Headline consumer inflation rose to a three-month high in September, strengthening the case for the central bank to hold borrowing costs higher for longer.
Annual inflation accelerated to 5.4% from 4.8% in August, Statistics South Africa said Wednesday.
This is an increase of 0.6% between August and September, bringing the CPI rate to the same level as June this year.
Patrick Kelly, Chief Director for Price Statistics at Stats SA, said the main contributors were food and non-alcoholic beverages, which increased 8.1% year-on-year, housing and utilities, miscellaneous goods and services and transport.
“The fuel index increased for a second consecutive month, rising by 7.6% between August and September. The price of inland 95 octane petrol hit a 13-month high of R24,54 in September,” Kelly said.
“After cooling for the past five months, the annual rate for food and non-alcoholic beverages inched higher to 8.1% from 8%”.
Kelly said poultry products were also more expensive in September due to the outbreak of bird flu in several provinces.
“Fresh whole chicken was up to 2.2% between August and September, frozen chicken portions increased by 1.9% and eggs by 0.3%.
“Inflation for bread and cereals eased for a fifth straight month, reaching 9.2% in September,” he said.
This data will inform the Monetary Policy Committee’s (MPC) interest rate decision at its meeting next month.
At its last MPC meeting in September, the SARB elected to keep the interest rate hiking cycle that has been ongoing since November 2021 on pause.
Speaking at the release of the SA Reserve Bank’s second monetary policy review on Tuesday, Governor Lesetja Kganyago warned that the battle against inflation is far from over.
“Inflation has been more persistent than initially thought, prompting central banks to say that they are going to keep policy tight for longer,” he said.
“But what we have seen recently has been that headline inflation has continued to decelerate but remains well above desired levels, requiring many advanced economy central banks to continue to consider even raising raise further.
However Kganyago reaffirmed the Reserve Bank’s policy stance, saying it will remain focused on anchoring inflation at the midpoint of the 3% to 6% target range.
“As the Monetary Policy Committee, we remain steadfast in our commitment to price stability and the necessary policy action required to anchor inflation and inflation expectations sustainably around the midpoint of the target band.