The latest data on consumer inflation reveals a promising development for the economy. The annual inflation rate dipped to 6.8% in April 2023, down from 7.1% in March, marking it as the lowest reading since May 2022, when the rate stood at 6.5%.
The monthly change in the Consumer Price Index (CPI) was 0.4% in April, contributing to the positive trend. However, while inflation as a whole is showing signs of easing, certain sectors, particularly food and non-alcoholic beverages, continue to experience price pressures.
The findings released by Statistics South Africa (Stats SA) on Wednesday reveal that the annual inflation rate for food and non-alcoholic beverages has slightly decreased. In April it stood at 13.9%, a slight improvement from March’s rate of 14.0%.
However, there is cause for concern within the milk, eggs, and cheese product group, as it experienced a significant 14.5% increase.
This surge is the largest recorded in 14 years, since January 2009. Over the past year, essential items such as a 2-litre carton of fresh full-cream milk, cheddar cheese, and eggs have all witnessed significant price hikes.
Vegetable prices experienced a significant surge in April, reaching an average increase of 23.1% compared with the same period last year. This marks the highest annual rate in over 15 years.
Onions, carrots, peppers, and potatoes were particularly affected, with price hikes ranging from 24.4% to 52.8%.
Coffee enthusiasts also faced the impact of rising prices, as non-alcoholic beverage inflation reached 10.4% in April. This rate is the highest recorded since January 2010. Ground coffee or beans, instant coffee, dairy blends, and fruit juices, all observed price changes above the average increase.
“Coffee lovers are feeling the pinch too. Annual inflation for non-alcoholic beverages was 10,4% in April, the highest rate since January 2010. Products that registered higher than average price changes were ground coffee or beans (up 17,8%), instant coffee (up 14,8%), dairy blends (up 19,2%) and fruit juices (up 16,5%),” reads the report.
On a positive note, the meat category exhibited a decline in inflation for the second consecutive month. In April, the inflation rate decreased from 10.6% in March to 9.5%. Similarly, there was a significant decrease in inflation for oils and fats, dropping from 16.0% in March to 9.9% in April. This marks the first time since November 2020 that the inflation rate for oils and fats has entered single-digit territory.
According to the report, transportation costs continued their downward trend, with the annual rate for fuel easing to 5.0% – the lowest reading since March 2021. However, the purchase of vehicles category witnessed a slight increase, with used vehicles becoming 12.9% more expensive than a year ago, while new vehicle prices rose by 6.7% over the same period.
“Sharp monthly price hikes were recorded for traditional reading material, such as newspapers (up 7,5%) and magazines (up 5,6%). This took the annual rate for the books, newspapers and stationery category from 10,2% in March to 11,5% in April.
“The miscellaneous goods & services price index jumped by 1,3% between March 2023 and April 2023. This category was the biggest factor behind the 0,4% monthly rise in the headline CPI, contributing 0,2 of a percentage point. Personal care prices climbed by 1,2% from March 2023. Some health insurance companies increased prices in April, lifting the health insurance index by a monthly 2,4%,” Stats SA recorded.
The overall data indicates a positive trajectory for consumer inflation, with a slowdown in the annual rate. However, persistent price pressures in the food and beverage sector, particularly the substantial increase in milk, eggs, cheese, and vegetable prices, present ongoing challenges for both businesses and consumers.
As the economy adapts to these fluctuations, policymakers, businesses, and consumers ought to continue to monitor price movements and make informed decisions to navigate these changing market dynamics effectively.
Meanwhile, consumers may face further unfavorable developments this week, as the central bank’s monetary policy committee is anticipated to announce changes to the repo rate on Thursday. Currently, the repo rate stands at 7.75%, while the prime lending rate is at 11.25%.
In contrast, the rand experienced a significant depreciation against the dollar when US ambassador Reuben Brigety accused South Africa of selling arms and ammunition to Russia over a week ago.
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