According to Statistics South Africa, consumer price inflation rose to 7.6% year-on-year in October, up from 7.5% the previous month. Photo: Supplied
“The official inflation rate [the percentage change in the Consumer Price Index for all urban areas in April 2012 compared with that in April 2011] was 6.1% at April 2012.”
This rate was 0.1 of a percentage point higher than the corresponding annual rate of 6% in March 2012.
But from March 2012 to April 2012 the CPI for all urban areas increased by 0.4%, Stats SA said in a statement.
Commenting on the figures, FNB household sector and property strategist John Loos said the slight year-on-year increase was the result of a slightly higher contribution from the housing and utilities CPI, along with the transport CPI.
Various “big ticket” high frequency purchases remained troublesome despite having subsided in recent months, he said.
Food and non-alcoholic beverages was a notable one, showing year-on-year inflation of 8.7% (9.1% if one excluded the beverages).
Creating pressure
The transport CPI was another, with 6.9% inflation.
“It is specifically the petrol sub-index of the transport CPI that creates the pressure, still showing year-on-year inflation of 20% in April, and this has accelerated from the previous 19.2%,” Loos said.
The other two high inflation components lay in the large housing index. They were electricity at 17.1% – not surveyed this month though – along with “water and other services” (9.2%) which included assessment rates.
As at April, the lower income/expenditure groups were still bearing the brunt of CPI more than the higher income/expenditure groups, which appeared largely because of food price inflation which still ran high, despite having subsided somewhat. Food was a significantly higher weighting in the expenditure basket of lower income groups.
High expenditure groups had a significantly higher weighting for the “owner occupied rental” component, and rental inflation remained subdued at present.
Loos said many households expressed scepticism regarding the “low” level of CPI. They perceived it to be far higher than the recent levels.
“This perception is not altogether unfounded, although it stems partly from perhaps a lack of understanding of how the CPI is composed.
Low frequency purchases
“I believe that few people appreciate that housing rentals, for instance, form part of the CPI, and more significantly that for those who don’t rent there is an ‘owner occupied rental’ component which estimates how much rental those of us who own homes would be paying in rental should we have been renting.”
The consumer did not feel this, nor did he/she regularly feel the cost of other low frequency purchases, such as motor vehicles or clothing which was not bought every day, but which had had relatively low cost inflation rates in recent times.
Rather, it was the costs of “high frequency” purchases that were most noticed, such as food or petrol prices and this had been where inflation had been the most extreme in recent times.
“When such high frequency purchases are experiencing high cost inflation, the perception, rightly or wrongly, that consumer inflation is higher than the measured rate is the likely outcome.”
Global food prices were a major cost category to be watched, with the inflation rate in rand-denominated food prices having “re-accelerated” in recent times. This remained the key risk to the lower income end of the market.
Perception of global economic softening had exerted some downward pressure on oil prices and this looked set to cause domestic petrol price inflation to moderate once more after a resumed increase in April.
The major positive contributor to CPI had been the weak residential rental market, and this looked set to continue to help contain overall CPI inflation to near 6%, Loos said. – Sapa