The annual inflation rate in South Africa soared to 7.8 percent in July from 7.4 percent in June, rising above the upper limit of the South Africa Reserve Bank’s target range (3% to 6%) and exceeding market expectations by 0.1 percent.
This percentage increase in the consumer price levels of the second largest economy in Africa intensified inflation pressures to a point last witnessed in 2009.
On a month-on-month basis, the consumer price levels ticked up by 1.5 percent, following a 1.1 percent increase in June and surpassing market projections of a 1.4 percent rise.
Metrics from Statistics South Africa show that:
- The annual core inflation, which excludes prices of food, non-alcoholic beverages, fuel, and energy, rose to a 58-month high of 4.6% in July, from 4.4% recorded in June.
- Also, the price of fuel surged 10.9 percent in July reflecting the inflationary impact of soaring global oil prices.
- The increase in fuel prices spilled over into transportation, as the cost of public transport spiked 5 percent from June’s inflation report.
- Food and non-alcoholic beverages rose by 9.7 year on year on year, adding 1.7 percentage points to the CPI. Prices of bread and cereals were also part of the main drivers of inflation.
- Housing and utilities increased by 4 percent on a year-on-year basis. Similarly, electricity bills rose by 8.1 percent, following the introduction of higher electricity rates which took effect in July.
- The major contributors to the higher annual inflation rate in South Africa were food and non-alcoholic beverages; housing and utilities; transport; miscellaneous good and services.