Lerato Mbhiza
Consumer prices in South Africa slowed for the second month in a row as inflation eased on bread, cereals, oils and fats.
Statistics South Africa (StatsSA) on Wednesday said the headline consumer price index (CPI) pulled back in December, easing to 5.1% from 5.5% in November and 5.9% in October.
This was the lowest reading in four months, edging closer to the South African Reserve Bank’s preferred 4.5% midpoint of the 3–6% target range.
Stats SA chief director for price statistics Patrick Kelly said prices decelerated mainly for food and non-alcoholic beverages, from 9.0% in November to 8.5% in December.
These included items such as bread and cereals, oils and fats, sugar, sweets and desserts, vegetables, and hot beverages.
In a statement, Stats SA said the average inflation rate for the year was 6.0%, lower than the 6.9% recorded in 2022.
Inflation was relatively high in the first five months of 2023, with the headline rate consistently above 6.0%.
Inflation fell below this level in the remaining seven months of the year. The highest rate in 2023 was 7.1% in March and the lowest was 4.7% in July.
Product categories ending the year with annual rates higher than 6.0% in December were food & non-alcoholic beverages at 8.5%, restaurants and hotels at 7.0% and health at 6.5%.
Economist Elise Kruger said a decline in fuel inflation supported a slowdown in inflation in December.
“We saw that food prices remained unchanged on a monthly basis; that was a definite positive in the month, but a couple of factors are still relevant. On the one side, the impact of load shedding that adds to the cost of food production but also the Rand exchange rate at currently high levels also impacting on some of our food prices determined in Dollar terms. I do forecast that food prices will moderate further from current levels to about 6% by the end of 2024. There were also further declines in fuel prices in December.”
“The transport index increased by 2,6% in the 12 months to December 2023 much lower than the annual rate of 13,9% recorded in December 2022. The slowdown is mainly a result of lower fuel prices that decreased by 2,5% over the previous 12 months and by 2,7% between November and December,”
In December last year, the Old Mutual Investment Group predicted that inflation will be coming down to 4.5% by mid-2024, the mid-point of the Reserve Bank’s inflation target.
The group is also positive about the lower stages of rolling blackouts next year, given the massive capital investment made by the private sector in renewable energy.
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