SA’s consumer price inflation edges up to 4.3% in August

South Africa's consumer inflation rose by 0.3 per cent to 4.3 per cent in August 2019, driven by increases in food and non-alcoholic beverages, as well as housing and utilities. Patrick Kelly, Chief Director of Stats SA, highlighted the main drivers behind the rise in inflation during an interview with CNBC Africa. The key contributor to the increase in food prices was grain and bread products, specifically items like bread and millie-meal. These products saw an annual increase of 8.6%, significantly higher than the average inflation rate of 3.8%. Additionally, oil-based products such as cooking oil and margarine also experienced price hikes, with a 2.2% increase between July and August. Weather conditions, including reduced grain supply due to less rainfall during the planting season, played a significant role in the price hikes. Kelly noted that meat products, which were in negative territory for a while, saw a slight increase in prices, further impacting food inflation. Housing and utilities also contributed to the rise in consumer inflation, primarily driven by increases in municipal tariffs for electricity and water. Kelly explained that these price hikes have pushed up this category substantially. Despite these increases, the international oil price, a key driver of fuel price changes, has been relatively stable, with fuel prices at a negative 0.7% on an annual basis. This stability has helped keep overall inflation within the Reserve Bank's target range. Kelly pointed out that over half of the inflation basket consists of services, mitigating the immediate impact of fuel price changes on the overall CPI. Looking ahead, Kelly mentioned that clothing inflation is around 3%, and housing accounts for a significant portion of the CPI, providing a level of stability to inflation rates. As consumers continue to face rising food and utility prices, there may be some relief in other sectors to help balance out the overall inflation rate. While the current inflation figure is within the Reserve Bank's target range, the upward trend in food and utility prices warrants continued monitoring to assess the impact on the broader economy.