The key drivers of price growth in July were food and non-alcoholic beverages (up 5.7% and contributing 1.0 percentage points). Photo: Supplied
South Africa’s annual consumer inflation accelerated to 3.5% in July from 3.0% the previous month, driven by food and non-alcoholic beverages, Statistics South Africa said on Wednesday.
This was the second consecutive year-on-year increase and the highest rate in 10 months.
On a month-on-month basis, consumer prices rose by 0.9% in July, after a 0.3% increase in June.
The key drivers of price growth in July were food and non-alcoholic beverages (up 5.7% and contributing 1.0 percentage points) and housing and utilities (up 4.3% and contributing 1.0 percentage points), the statistics agency said. During the period, the annual inflation rate for goods was 3.2%, up from 2.3% in June, and services was 3.6%, down from 3.7% in the previous month.
South Africa’s inflation rate has consistently been within the South African Reserve Bank’s target range of 3% to 6%. The bank upwardly revised its inflation forecast for the year to an average of 3.3%.
Last month, Reserve Bank governor Lesetja Kganyago said the monetary policy committee (MPC) would start targeting a 3% inflation rate, given that inflation had been subdued for the most part.
“It is important to sustain this progress and to minimise uncertainty about the longer-term objectives of monetary policy,” Kganyago said in the July MPC meeting.
“Therefore, the [monetary policy committee] now prefers inflation to settle at 3%. In line with this, we have decided to aim for the bottom of our inflation target range, of 3 to 6%.”
“We welcome the recent moderation in inflation expectations and would like to see expectations fall further. This would expand policy space and make our framework more robust to shocks. We will use forecasts with a 3% inflation anchor at future meetings.”