CPI for February 2022

Consumer price inflation increased by 5.7% year-on-year in February 2022, which matched the increase recorded the previous month and means that inflation remains within the target band, but above the midpoint of the band since May 2021. Month-on-month inflation increased by 0.6%, which was up from the 0.2% increase the previous month.

Transport was again the largest contributor to inflation (+1.9%), matching the year-on- year increase recorded last month. Food and non-alcoholic beverages (+1.1%) and housing and utilities (+1.1%) were the other large contributors over the year, with all 11 inflation groups adding to inflation. On an inflation sub-group level, the largest contributors were fuel (+29.4%), electricity and other fuels (+14.1%) and public transport (12.3%). The increase in fuel and electricity prices is likely to have secondary inflation effects as these are cost inputs for many industries.

The South African Reserve Bank (SARB) has managed to keep inflation within the target bank over a period where global inflation has been increasing. The conflict in Ukraine and sanctions on Russian exports are likely to be inflationary and will put more strain on central banks worldwide. With the uncertainty on the path of short-term interest rates in the US and how the SARB will need to react to that, the PPS funds have generally maintained the asset allocation and continue to benefit from the high yields available in the domestic bond market.