5.9% inflation rate marks 11th month above Sarb’s midpoint

‘Inflation rate will remain elevated domestically and globally’ says chief economist.
Image: AdobeStock

Statistics South Africa’s (StatsSA) data, released on Wednesday, shows a 1% increase in the consumer price index (CPI) from 5.7% in February to 5.9% in March.

According to the Don Consulting Group’s (DDG) chief economist Chifi Mhango, the current inflation rate raises concern because it is just 0.1% below the 6% upper target range of the South African Reserve Bank’s (Sarb’s) inflation rate.

The main drivers of the increase are food and non-alcoholic beverages (contributing 1.1% to the current rate with an annual increase of 6.2%), housing and utilities (1.2%; annual increase 4.8%), transport (2.1%; annual increase 15.7%) and assorted goods and services (0.5%; annual increase 3.2%).

Overall, the data shows an 8.7% increase in the annual inflation rate for goods and a 3.4% increase for services.

Mhango says that the “inflation rate will remain elevated domestically and globally as supply chain bottlenecks persist amid the war in Ukraine as food and transport cost[s] surge.”

This comes after reports that inflation rates across the globe have also surged, including in the United States with an 8.5% annual increase in the inflation rate – the highest since 1981.

Mhango believes that the inflation rate shows no prospects of declining soon, citing the effects of the war in Ukraine on low supply and high consumer demands, which he believes will continue to influence the price of goods for much longer than intended.

Nondumiso Lehutso is a Moneyweb intern

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