Another inflation shocker: CPI remains red hot as food price hikes hit 14%

Contrary to forecasts, annual consumer price inflation is still heading higher – reaching 7.1% in March, up from 7.0% in February. Economists expected CPI to cool to below 7% in March.

Instead, consumer prices rose by a full percentage point from February to March – the biggest monthly rise since July last year, Statistics SA said.

Source: Statistics SA

This was largely the result of pricier food. Prices of food and non-alcoholic beverages rose by 14.0% over the past year, the biggest increase in 14 years. This contributed 2.4 percentage points to the total CPI annual rate of 7.1%, Statistics SA reported.

Prices of milk, eggs and cheese rose by 13.6% over the past year, from an annual rate of below 4% a year ago.

But inflation has started cooling in the categories for bread and cereals (20.3%, down from 20.5% in February), meat (10.6% from 11.4%) as well as oils and fats (16.7% to 16%).

Source: Statistics SA

Source: Statistics SA

Prices for personal care items increased by 11.1%, the highest rate since 2009.

While fuel prices rose by 4.5% between February and March due to price hikes, the transport index cooled to 8.9% in the 12 months to March, from 9.9% in February. This was the eighth consecutive month of slowing fuel inflation, Statistics SA reported.

The latest inflation number included school and university fees, which are surveyed once a year in March.

Primary and pre-primary school fees were up 6.3%, while fees for secondary school rose 5.8% and by 5.3% at tertiary institutions. Textbook prices jumped 11.3%, the largest annual increase since 2009.

It’s still unclear whether the hotter-than-expected inflation rate in March will convince the monetary policy committee (MPC) to hike interest rates even higher at its next meeting at the end of May.

In March, the MPC shocked markets by hiking rates by another 50 basis points after February’s inflation number also surprised on the upside.

Reserve Bank governor Lesetja Kganyago estimated that load shedding is adding 0.5 percentage points to inflation.

The next monetary policy meeting is scheduled for 23 to 25 May.

https://www.news24.com/fin24/economy/another-inflation-shocker-cpi-remains-red-hot-as-food-price-hikes-hit-14-20230419

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