August inflation higher than expected due to bread, pap price shocks
South Africa's consumer inflation rose by 4.3% in August, compared to 4% in July.
This is slightly higher than expected: economists polled by Bloomberg had predicted an increase of 4.2%.
Annual food inflation reached its highest level in 18 months, registering 3.8% in August, Statistics SA reported. This was mostly due to a 8.6% increase in bread and cereal prices - the highest annual inflation reading for bread and cereals since February 2017, when the rate was 12.8%.
Mielie meal prices have seen a sharp hike. Super maize was almost 18% more expensive in August compared with the same month last year. Special maize prices jumped by 27.5% over the same period.
Oil-based food items – such as cooking oil and margarine, which are derived mainly from sunflowers – also saw a sharp jump. While annual inflation for oils and fats is currently at 4.4%, monthly inflation came in at 2.2% in August, the biggest monthly jump since January 2016.
Fish prices were also on an upward trend. Annual fish inflation was 7.5% in August, with tinned fish (excluding tuna) 8.7% more expensive than it was a year ago.
August’s higher-than-expected inflation number is expected to give the SA Reserve Bank’s monetary policy committee pause for thought as they started their deliberations on interest rates on Wednesday. They will make their announcement on Thursday. Most economists are not expecting a rate cut. The repo rate was lowered to 6.5% at the previous meeting in July.
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