South Africa’s CPIX inflation (headline inflation excluding mortgage costs) was up 5% year-on-year (y/y) for metro and other urban areas in June compared with 4,4% y/y in May, April and March; 4,8% y/y in February; 4,2% y/y in January; and 4% y/y in December, Statistics South Africa (Stats SA) said on Wednesday.
CPIX was up 0,2% month-on-month (m/m) compared with a 0,1% m/m increase in May.
Headline consumer prices — the 12-month rate of change in the consumer price index (CPI) for metropolitan areas — was up 1,2% y/y from a 0,6% y/y increase in May.
The June core inflation rate, which excludes volatile foods, municipal rates and monetary policy changes, rose to 5,7% y/y from 4,9% y/y in May; 4,5% y/y in April; 4,7% y/y in March; 5,3% y/y in February; and 4,7% y/y in January.
The CPIX, which is used by the South African Reserve Bank for its inflation target, was expected to rise to 5,5% y/y.
The CPIX has only been calculated back to January 1997. The range of forecasts for CPIX was from 5,1% y/y to 6,1% y/y. The SARB’s inflation target is to keep the y/y rate for CPIX within a range of 3% y/y to 6% y/y.
The last time South Africa experienced y/y deflation at the consumer level was August 1954 when it was -0,3% y/y.
The June headline CPI for all items was also expected to increase. The consensus forecast was for a 1,5% y/y increase. The range of CPI forecasts was from 1,1% y/y to 2,1% y/y.
Stats SA said the main contributors to the 1,2% CPI increase were similar to those for May 2004, namely annual increases in transport; medical care and health expenses; household operation; food; and education.
The main contributors to the 5% increase in CPIX were annual increases in transport; housing, excluding interest rates on mortgage bonds; medical care and health expenses; household operation; food; and education.
The annual rate of increase in food prices for the historical metropolitan areas was 2,7% at June 2004 (that is, the CPI for food at June 2004 compared with that at June 2003). This rate of 2,7% is 0,4% higher than the corresponding annual rate of 2,3% at May 2004.
“The increase of 2,7% was due to annual increases in the prices of meat; ‘other’ food products; milk, cheese and eggs; fruit and nuts; vegetables; fish and other seafood; fats and oils; and sugar,” Stats SA said.
Stats SA said on Wednesday that administered prices are playing an increasingly important role in the understanding of the CPI and that, after discussions with the National Treasury, the South African Reserve Bank and international consultants, an agreement has been reached as to what constitutes an administered price as distinct from a determined price.
“Stats SA is now in a position to indicate a CPI for administered prices. As from the next publication the following new indices will be included in the release: CPI for administered prices; CPI for administered prices that are regulated; CPI for administered prices that are not regulated; CPIX for administered prices; CPIX for administered prices that are regulated; and CPIX for administered prices that are not regulated.” — I-Net Bridge