South Africa’s June inflation hits 6-month high, undershoots expectations

By bne IntelliNews July 22, 2015

South Africa’s headline annual consumer price inflation accelerated for the fourth consecutive month in June, but came in well below market expectations, giving some breathing room to rate setters who struggle to find a balance between rising inflation and lacklustre economic growth.

June’s inflation edged up to a 6-month high of 4.7% y/y from 4.6% y/y in May, driven by transport costs, which returned to growth, data from Statistics South Africa showed. The consensus view was for 5%, according to a Business Day survey. The monthly inflation ticked up to 0.4% from 0.3%.

The central bank is due to announce its rate decision on July 23 and most analysts expect it to hike the key repo rate by 25bp after holding it at 5.75% for a year.

The annual core inflation, which excludes the prices of food, non-alcoholic beverages, petrol and energy eased to 5.5% last month from 5.7% in May, suggesting somewhat reduced inflationary pressures. The monthly core inflation nudged up to 0.3% from 0.2%.

  y/y inflation contribution to the y/y change in headline CPI m/m inflation
  June-15 May-15 June-15 May-15 June-15 May-15
Food and non-alcoholic beverages 4.7% 4.7% 0.7 0.7 0.4% 0.6%
Alcoholic beverages and tobacco 9.7% 9.7% 0.5 0.5 0.2% 0.6%
Clothing and footwear 5.6% 5.4% 0.2 0.2 0.4% 0.3%
Housing and utilities 5.4% 5.6% 1.3 1.3 0.7% 0.0%
Household contents and services 2.3% 2.6% 0.1 0.1 0.9% 0.1%
Health 6.0% 7.0% 0.1 0.1 -0.3% 1.2%
Transport 0.7% -0.7% 0.1 -0.1 1.4% 0.3%
Recreation and culture 2.0% 1.8% 0.1 0.1 0.3% 0.0%
Education 9.3% 9.3% 0.3 0.3 0.0% 0.0%
Restaurants and hotels 6.1% 6.4% 0.2 0.2 0.3% 0.9%
Miscellaneous goods and services 7.2% 7.4% 1.1 1.1 -0.1% 0.2%
Headline CPI 4.7% 4.6%     0.4% 0.3%
Source: Staistics South Africa            
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