Annual headline inflation cooled to 5,4% in June from 6,3% in May, sinking below the upper limit of the South African Reserve Bank’s monetary policy target range.
The last time inflation was below 6% was in April 2022. The rate in June is also the lowest reading in 20 months (since October 2021) when the rate was 5,0%.
This could spell good news for over-indebted consumers, who have been buckling under high interest rates. The Reserve Bank will tomorrow (20 July) announce the latest decision of the Monetary Policy Committee on whether to hike rates once more, or hold it steady.
In May, the Reserve Bank increased rates for the 10th consecutive time since the start of 2022, with South Africans seeing the repo rate rise from 3.75% at the start of January 2022.
The Repo Rate (the rate at which banks borrow money) is currently at 8.25%, while the Prime Lending Rate (the rate at which individuals borrow money from the bank) stands at 11.75%.
ALSO READ: Interest rates: Short term pain for long term gain?
Vegetables, fruit, and sugar, sweets & desserts inflation buck the trend
According to Stats SA, annual inflation for food and non-alcoholic beverages (NAB) slowed for the third successive month, cooling to 11,0% from a high of 14,0% in March.
Most food and NAB components recorded lower inflation rates in June, with the exception of vegetables, fruit, and sugar, sweets & desserts.
Annual inflation for sugar, sweets & desserts accelerated from 11,9% to 16,4%. This is the highest reading for this category since June 2017. Notable annual increases were recorded for brown sugar (up 17,4%), white sugar (up 17,1%) and chocolate slabs (up 16,2%).
Prices for oils & fats decreased for the tenth successive month, with the index declining by 9,5% in the 12 months to June. The average price of a 750 ml bottle of sunflower oil was R35,57 in June 2023, lower than the R43,97 price tag in June 2022.
The annual inflation rate for alcoholic beverages & tobacco increased to 6,1% from 5,9% in May. Wine inflation quickened to 9,4% from May’s reading of 9,1%. Beer inflation accelerated too, rising to 5,5% from 4,7%.
Onions are an eye-watering 64,5% more expensive than a year ago.
Read more on the latest consumer price data here: https://t.co/0N2A6N1adZ#StatsSA #CPI #Inflation pic.twitter.com/XTLquP8QEw
— Stats SA (@StatsSA) July 19, 2023
Other notable price changes in June
Annual transport inflation tumbled from 7,0% in May to 1,8% in June, dragged lower mainly by softer fuel prices.
The fuel index declined by 8,3% in June 2023 compared with June 2022. The monthly change was -3,1%.
The CPI in June incorporates the most recent quarterly survey of housing rents. Actual rents recorded an annual increase of 2,7%, slightly higher than March’s print of 2,5%. The annual rate for imputed rents was 2,9%, up from 2,7% in March.
On a quarter-on-quarter basis, imputed rents increased by 1,2% between March 2023 and June 2023. This is the largest quarterly increase since September 2018, when the rate was also 1,2%.
