Consumer price inflation down in December despite higher food prices

Herman van Papendorp, Head of Investment Research & Asset Allocation at Momentum Investments

Sanisha Packirisamy, Economist at Momentum Investments

Johann van Tonder, Economist at Momentum Investments

Highlights

• South Africa’s consumer price inflation rate averaged 3.3% in 2020, down from 4.1% in 2019.
• December’s year-on-year (y/y) inflation rate edged down to 3.1% from 3.2% in November.
• Month-on-month inflation rose by 0.2%, higher than the 0% in November.
• The main drivers behind December’s monthly increase were food and transport prices, while food, non-alcoholic beverages and utility prices contributed most to the y/y increase.
• Core inflation remained unchanged at 3.3% y/y.
• The consumer price inflation rate is expected to increase gradually in 2021 and 2022, putting pressure on the repo rate to rise in the second half of this year to keep inflation around the midpoint of the 3% to 6% target band.

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