In June, the country’s CPI raced to a 13-year high of 7.4% on an annual basis, as food and fuel prices sizzled and burned a hole in the pockets of hard-pressed consumers. The data, released on the eve of the next interest rate decision by the central bank’s Monetary Policy Committee , leaves no doubt thatConsumer inflation just keeps on accelerating. After hitting 6.5% in May, it quickened to 7.4% in June, Statistics South Africa said on Wednesday.
The main accelerants are still food and fuel price pressures, and these will be further inflamed by the weak rand, which at more than 17/$, is looking vulnerable to a further slide. Food inflation hit 9% in the year to June, while consumer transport prices rose 20% year on year. Fuel inflation is running at 45.3%.
“Our call is still for a 50 basis point rate hike, although there are risks, given Sarb concerns over wage demands,” said Razia Khan, Chief Economist for Middle East and Africa at Standard Chartered Bank in London. Luigi Marinus, Portfolio Manager at PPS Investments, points out in a commentary on the data that such a view ignores “second-round” inflationary effects, which are high on the MPC’s radar screens.
All thank's to the thieving ANC!