Buckle up: Inflation rises ahead of repo rate announcement

South Africa has witnessed a surge in inflation with the rate ticking up to 5.9% in October, exceeding market expectations.

The data released by Statistics SA (Stats SA) on Wednesday reveals a third consecutive monthly increase, with consumer prices rising by an average of 0.9% between September and October, marking the highest monthly rise in three months.

A significant contributor to the spike in inflation is the surge in food prices, particularly driven by panic buying related to scarce eggs and chicken products.

According to Stats SA, inflation for food and non-alcoholic beverages accelerated for the second consecutive month, reaching 8.7% in October.

The increase was driven by higher prices for eggs, with an overwhelming 13.4% rise from September, leading to an annual rate of 24.4%.

Poultry-related products including eggs faced supply shortages due to the avian flu outbreak, prompting panic buying and driving up prices.

Potatoes, other essentials on the rise

Stats SA said while eggs took the spotlight, potatoes recorded a notable price increase of 21.2% between September and October, driving the annual rate for this vegetable to a staggering 64.6%.

“The average price for potatoes increased by R8.89 from R13.93 per kilogram in October 2022 to R22.82 per kilogram in October 2023.

“Inflation for vegetables and fruit is typically volatile. The annual rate for vegetables was 23.6% in October, the highest reading since December 2007 when the rate was 23,8%.

“While potatoes recorded the largest monthly increase, sweet potatoes were up 16.4%, tomatoes by 15.2% and pumpkin by 11.1%.”

The annual rate for fruit was 8.5%.

“Banana prices increased by 33% in the 12 months to October. The average price of bananas in October 2023 was R21.20 per kilogram, up from R14.92 in October 2022.”

The impact of rising food prices varies across regions, the statistician said.

While Western Cape consumers experienced the most significant increase, with a tray of six eggs rising by R6.42 from October 2022 to October 2023, Gauteng saw a substantial rise.

However, the Free State bucked the trend, recording a slight drop in the average price for a tray of six eggs.

Not all doom and gloom

The rise in food costs reflects broader economic difficulties the country is facing.

Previous increases in petrol and diesel prices have worsened transportation expenses, contributing to the overall upward trend in inflation.

Although the current spike in inflation may cause concern among consumers, analysts predict that the headline rate will eventually stabilise and return to Reserve Bank’s target range of 3% and 6%.

The decrease in meat inflation, which has been consistently declining since February, and the upcoming petrol price slumps offer a ray of hope amid these economic challenges.

Said Stats SA: “Just in time for the summer braai season, meat inflation continued to slow. The annual rate for meat moderated to 3.4% in October from 3.8% in September.

“Meat inflation has been on a general downward trajectory since the recent peak of 11.4% in February.”

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