Good news for consumers: Inflation is falling again

Henry

Statistics South Africa (StatsSA) announced on Wednesday that the inflation rate fell by 0.4 percentage points in December to 5.1% – even lower than the monthly inflation rate of 5.5% in November and 5.9 % in October last year.

Economist Dawie Roodt says this is good news.

Roodt says the latest monthly inflation rate of 5.1% is a “fraction lower” than what the market expected.

“So it’s a good figure.”

StatsSA further announced that the average inflation rate for 2023 stood at 6%. In 2023, inflation therefore fell by almost a percentage point compared to 2022 (6.9%).

The consumer price index (month to month) remained unchanged in December.

“Inflation is still on the high side, but there is an underlying trend of a gradual decline in the inflation rate. It is certainly positive,” says Roodt in response to the latest and final inflation figure for the 2023 financial year.

According to StatsSA’s figures, inflation was relatively high during the first five months of 2023 (January to May). The asset rate has remained consistently above 6%.

However, inflation declined below this level for the remaining seven months of the year. The highest reading in 2023 was 7.1% in March and the lowest was 4.7%, which was recorded in July.

The latest figures also show that inflation slowed down in December for bread and cereals, oils and fats, sugar, sweets and desserts, vegetables and also hot drinks.

The bread and cereal price index fell by 0.2% between November and December, reducing the annual inflation rate for this category to 7.5%. Maize flour prices decreased by 0.9% over the same period, with the average price of a bag of maize flour (2.5 kg) falling from R37.04 in November to R36.64 in December.

Inflation for oils and fats remained in deflationary territory during December, recording an annual change of -5.9%. Cooking oil prices fell by 1.6% between November and December.

The average price for a bottle of sunflower oil (750 ml) was R35.82 in December, lower than the R37.47 in February 2023 and much lower than the R45.33 recorded in July 2022 for the price of sunflower oil.

However, the price of meat, milk, eggs, cheese, fish and fruit rose in December.

Annual meat inflation rose to 3.9% in December compared to 3.5% in November.

Poultry products also experienced sharp annual price increases: the price of chicken breasts rose by 18.5%, while the price of fresh chicken portions rose by 14.6%. Other increases include an 8.8% increase in the price of non-quick-frozen chicken pieces, whole chickens (+8.4%) and quick-frozen (IQF) chicken portions (+6.4%).

The milk, egg and cheese price index rose by 14.5% in the 12 months to December, higher than November’s rate of 13.9%. The 12-month rise in egg prices was 38%, slightly lower than November’s 39.9% push.

Although the sugar, sweets and desserts category overall recorded a lower annual rate in December, sugar prices generally continued to rise last year. White sugar is 20.1% and brown sugar 24.6% more expensive than a year ago.

The transport index rose by 2.6% in the 12 months to December 2023 – well below the annual rate of 13.9% recorded in December 2022. The slowdown is mainly the result of lower fuel prices, which fell by 2.5% over the previous 12 months, and by 2.7% between November and December.