Annual consumer price inflation cooled to 7.2% in December, down from 7.4% in November and 7.6% in October, Statistics SA reported on Wednesday.
December’s inflation rate was slightly lower than what economists had expected. The median forecast of 15 economists in a Bloomberg survey was 7.3%.
The consumer price index rose 0.4% in December from the previous month.
Food and non-alcoholic beverage prices jumped 12.4% year-on-year, just slightly down from 12.5% in November.
Bread and cereal prices were 20.3% higher in December 2022 than a year earlier, while oils and fats (+22%) were also much more expensive. Meat prices are up 10% in 2022, while vegetables are up 12%.
Source: SA Statistics
While South Africa has enjoyed bumper harvests, increases in fuel prices and loss of cargo have pushed prices up.
Transportation costs were almost 14% higher in December 2022 compared to a year ago, even after major diesel price cuts earlier in the month. After further declines in early January, the price of gasoline has returned to the levels last seen before the invasion of Ukraine triggered an increase in the price of oil.
The SA Reserve Bank only expects inflation to “sustainably” return to its target level of 4.5% by the second quarter of 2024.
With inflation still well above its target level, traders expect the Reserve Bank to raise interest rates when the MPC meets again on January 26.the.
The prime rate has already gone from 7% in November 2021 to 10.5% currently, while the MPC tries to cool down inflation.
Average annual consumer price inflation for 2022 was 6.9%, the highest rate since 2009, Bloomberg reported. The average inflation rate in 2021 was 4.5%.
