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Consumer inflation has eased since June’s 30-month high, but recent supply disruptions could keep food prices relatively high in the short to medium term, analysts said.
According to yesterday’s Statistics South Africa (StatsSA) data, the annual consumer price index (CPI) fell from 5.2% in May to 4.9% in June. However, the CPI rose 0.2% in June from 0.1% in May.
According to StatsSA, the change in CPI values in June was due to food and non-alcoholic beverages, as prices in this category remained unchanged at 6.7%. However, StatsSA said there was an average price increase of 0.2% between May and June in this category.
Nicky Weimar, senior economist at Nedbank, said rising food prices are likely to continue to raise overall living costs.
“Prices are expected to return to trend in the coming months, but food and fuel supply constraints caused by recent unrest in key regions of the country pose a significant upward risk to the outlook.” Said Weimar.
“In addition, concerns about a surge in global inflation and faster normalization of global monetary policy also bring up the inflation outlook.”
Patrick Kelly, chief director of price statistics at StatsSA, said oil prices continued to skyrocket, hitting a record high of the year in June.
“Especially cooking oil products have recorded a sharp increase. The average price of a 750ml bottle of sunflower oil in June 2020 was R20.99, but in June 2021 it rose to R29.45. “He said.
Core inflation is now only 3.2%, up from the previous 3.1%.
June fuel prices recorded the third month of double-digit inflation of 27.5%, but accommodation inflation rose.
FNB economist Kokezo Mano said food inflation should remain relatively high, although the extent of the turmoil caused by the civil war last week is not yet clear.
Mano said there was a risk that disruptions to the processing and distribution networks following public unrest could put upward pressure on non-essential foods.
“Panic buying could be another source of upward pressure on commodity inflation,” Mano said. “Nevertheless, we believe that overall demand remains restrained, especially due to the number of jobs currently at risk and low consumer confidence.”
Rand also poses additional risks to the inflation outlook as it continued to weaken yesterday, making all emerging market currencies safer for investors, with highly contagious delta coronavirus variants stagnating global economic recovery. Assets.
Rand’s trajectory will continue to drive the timing and pace of the pending rate hike cycle by the South African Reserve Bank, said Casey Delport, an investment analyst at Anchor Capital.
“A surge in food and fuel prices could raise banks’ short-term inflation expectations, and banks could raise concerns about the impact of anxiety on inflation,” Delport said.
Food prices remain high despite easing consumer price inflation
Source link Food prices remain high despite easing consumer price inflation