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Ever-rising fuel prices push inflation to a 5-year high

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Fuel prices have contributed the biggest to increases in prices of food and services in South Africa. According to Statistics South Africa’s latest consumer price index, fuel contributed 32.5% to the latest inflation figures which broke through the upper limit of the Reserve Bank’s target range.

South Africa’s inflation was recorded at 6.5% in May 2022, up from 5.9% in April 2022.

This is the highest reading since January 2017 when the rate was 6.6%, with inflation now higher than the upper limit of the South African Reserve Bank’s monetary policy target range of 6%, pointing to further interest rate hikes in July.

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Transport and food and non-alcoholic beverages (NAB) accounted for just over half of the annual rate, with sharp price increases recorded in both categories. Fuel, in particular, continues to be a major contributor: if the impact of fuel is removed from the CPI reading in May, the headline rate falls to 5.1% from 6.5%.

Diesel prices jumped by 8.1% between April and May, taking the annual rate to over 45%. The average price of a litre of diesel in May 2021 was R16.20 – meaning it costs R729 to fill a 45-litre tank. Twelve months later, with the average price at R23.67 per litre, filling the same tank cost R1,065.

Petrol prices moderated between April and May, edging lower by 0.7%. Despite this decline, petrol is almost 27% more expensive than it was in May 2021.

Some of the largest annual price increases (May 2021 vs May 2022) were recorded for the following goods and services:

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  • Fuel: +32.5%
  • Electricity and other fuels: +14.4%
  • Public transport: +12.5%
  • Meat: +9.4%
  • Bread and cereals: +8.4%
  • Wine: +7.9%
  • Beer: +7.8%
  • Fish: +6.2%

Prices for food and non-alcoholic beverages jumped by 2.1% between April and May, representing the largest monthly increase since February 2016 when the monthly rise was also 2.1%. At that time the country was experiencing a severe drought.

Read also: Fuel prices could hit R27, here are the biggest pushing factors

The oils and fats product group continues to witness sustained levels of high inflation. The annual rate was 26.9% in May, representing the 17th month that the rate has been above 10%. Prices jumped by 10.1% between April and May, representing the first time since 1997 that the monthly rate was above 10%.

Sunflower oil, the product with the highest weight in the oils and fats group, is almost 40% more expensive than it was a year ago. Prices jumped by 16.1% between April and May.

The monthly rate for bread and cereals was 3.4%, taking the annual rate to 8.4%. Maize meal recorded a monthly increase of 5.1% and a loaf of white bread was 3.7% more expensive.

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Annual meat inflation has remained above the 6% mark since November 2020, with the reading for May 2022 at 9.4%. Prices for individually quick frozen (IQF) chicken portions and stewing beef increased by 13.7% and 12.2% respectively in the twelve months to May. – BusinessTech

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