Consumer price inflation up slightly in May, nothing to panic about

InflationAn increased fuel price is believed to be the reason behind consumer price inflation increasing by 0.1% to 4.5% in May 2019.

consumer price inflation up slightly in may nothing to panic about 1024x576 - Consumer price inflation up slightly in May, nothing to panic about

84b9491f inflation 1200x675 - Consumer price inflation up slightly in May, nothing to panic about

Information released by Statistics South Africa (Stats SA) has shown that consumer price inflation (CPI) rose by 0.1% in May 2019, but remains below average inflation since 2017.

Rising inflation in perspective

Stats SA blamed the slight increase to CPI in May on a rise in fuel prices during the month.

However, it is not just the price of fuel that has an impact on prices.

Stats SA noted with concern that 20 of the 34 products comprising the CPI basket of essential items had risen by 3.2% more than the inflation rate average for the food and beverage industry.

“In 2019, maize meal increased by 11.4% between January and May and by 1.4% between April and May,” the report read.

“In May, annual inflation for tinned fish (excluding tuna) was 7.4%, and monthly prices were up by 1%.

“Also in May, mageu prices climbed by 8.5% (annual) and 0.6% (monthly) and cooking oil prices rose by 7.3% (annual) and 1.4% (monthly).”

South African monetary policy states the ceiling for inflation is 6%. Current data shows CPI is well below that threshold and is actually even still below the 4.7% average inflation shown since April 2017.

45d89a0c cpi1 - Consumer price inflation up slightly in May, nothing to panic about

With a fuel price drop of close to R1 expected in July, this will hopefully bring inflation back into line, at least until the next petrol price announcement.

CPI explained

The CPI is important because it measures the prices of items deemed to make up a basket of essential goods and services for consumers.

It tries to track the average price level of the economy and how expensive it is for consumers to obtain these essential goods and services.

At its heart its a measure of how functional an economy is and how effective a government’s economic policy is. If CPI is well above what consumers are earning then it won’t be long until no-one can afford to buy food.

Leave a Reply

Your email address will not be published. Required fields are marked *