Inflation spikes to 4.4% in April

A shock rise in consumer price inflation (CPI) has left the South African Reserve Bank’s (Sarb) Monetary Policy Committee (MPC) with a difficult choice when it comes to raising interest rates tomorrow.

Sarb governor Lesetja Kganyago has previously signalled that the repo rate will remain unchanged at 3.5% for some time but an increase in the annual CPI to 4.4% in April 2021, from 3.2% in March 2021, might force the MPC to reconsider.

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Stats SA says this was a rise of 0.7% month on month in April 2021.

“The main contributors to the 4.4% annual inflation rate were food and non-alcoholic beverages; housing and utilities; transport; and miscellaneous goods and services.”

#CPI inflation hit a 14-month high in April, mainly driven by rising #transport and food prices. The rate was 4,4%, up from 3,2% in March.

Listen here for more: https://t.co/my3YvLKh5L#StatsSA #inflation pic.twitter.com/VfpPZyBX0n

— Stats SA (@StatsSA) May 19, 2021

The statistics agency says food and non-alcoholic beverages increased by 6.3% year on year, and contributed 1.1 percentage points to the total CPI annual rate of 4.4%.

Housing and utilities increased by 2.3% year on year, and contributed 0.6 of a percentage point. Transport increased by 10.6% year on year, and contributed 1.5 percentage points.

Miscellaneous goods and services increased by 4% year on year, and contributed 0.7 of a percentage point.

The annual inflation rates for goods and for services were 6.4% and 2.7% respectively.

The surprise rise in CPI reverses the downward trend in inflation over the past five years and moves it close to the midpoint of the MPC’s inflation target.

Source: Sarb