Relief as inflation falls below 6%

Annual consumer price inflation slowed dramatically to 5.4% in June from 6.3% in May. 

The last time consumer inflation was below the Reserve Bank’s maximum target of 6% was more than a year ago, in April 2022. This may help to convince the monetary policy committee not to hike interest rates on Thursday.

Source: Statistics SA

Economists polled by Reuters forecast a decline to 5.6% and June’s inflation data was also the lowest level in 20 months, Statistics SA reported. The CPI increased by only 0.2% from April to June 2023.

The annual inflation rate for goods was 6.3%, down from 8.0% in May and for services it was 4.5%, down from 4.6% in May.

Lower fuel prices contributed to the much softer inflation number, with annual transport inflation tumbling from 7.0% in May to 1,8% in June, dragged lower mainly by softer fuel prices. The fuel index was 8.3% lower in June 2023 than in June 2022.

Food and non-alcoholic beverages prices also cooled for the third month in a row – from 14% in March to 11% in June. Most food categories saw slower price growth, with some products actually becoming cheaper – the average price of a 750 ml bottle of sunflower oil was R35.57 in June, from almost R44 a year ago, for example.

But while prices hikes are cooling, most food prices remain far above 2022 levels.

Source: Statistics SA

Statistics SA also reports that prices for sugar, sweets and desserts rocketed from 11.9% to 16.4% in the year to June. Prices for brown sugar (+17.4%), white sugar (up 17.1%) and chocolate slabs (up 16.2%) saw the biggest hikes. Wine (+9.4%) and beer (+5.5%) prices also saw sharper increases.

Source: Statistics SA

The latest CPI number shows that residential rent increased by 2.7% in June compared to a year ago. Over the past quarter, rent prices increased by 1.2% – the biggest hike in almost five years. news24.com