PPS Investments: CPI for August 2022

Consumer price inflation increased by 7.6% year-on-year in August 2022, down from the 7.8% year-on-year print in July 2022. Inflation now averages 6.6% for the calendar year-to-date which is well above the top end of the target band. Month-on-month inflation increased by 0.2%, compared to the 1.5% increase the previous month.

Transport has again been the largest contributor to inflation over the past year as it has been every month this year apart from January. Although transport has contributed 2.9% of the 7.6% increase over the year, the month-on-month contribution of transport saw a decline of 0.1% mainly due to the recent decline in the petrol price on the back of the slight moderation of the global oil price. Other large contributors to inflation over the year are food and non-alcoholic beverages (1.9%) and housing and utilities (1.0%). All 11 inflation groups did however see an increase in prices year-on-year, as was the case for the past few months. Food and public transport which are important inflation considerations for many South African consumers saw increases of 11.5% and 23.6% respectively over the year, in part as a result of the secondary effect of the 43.2% increase in fuel prices.

While an inflation rate of 7.6% is higher than the South African Reserve Bank (SARB) would aim for, it is the first decline in an inflation print since January. This is unlikely to slow the hiking cycle the SARB is employing but may be the first indication that the hawkish view is having the required effect on inflation. This decision is however not taken in isolation and the action of the US Federal Reserve will be a consideration in the SARB’s deliberations.