Bad news for cash-strapped consumers, as harsh food price increases drive up inflation
Meat prices accelerated to their highest increase exactly five years ago in February, to 11.4% in from 11.2% in January.Things are bound to get worse before they get better for South African consumers after inflation took a wrong turn, increasing in February after months of moderating from record levels in July last year.
Another staple, food maize meal shot up 2.2% between January and February, bringing its inflation rate to 34.7%.With eight of the nine categories now in double digits on an annual basis, it’s a very harsh increase cycle and it is impacting particularly on the poor population of South Africa Nedbank specialist economist Johannes Khosa said that despite today’s increase, CPI would taper down towards the end of the year to below 5%.
“The MPC will also be alarmed by the acceleration in core and services inflation, which suggest broadening price pressures. While the upside risks remain considerable, we still expect inflation to dip below 5% by the end of the year, as the economy slows down to a crawl. At this stage, we see the first cut in the cycle at the November meeting.”But there’s been debate on whether tightening monetary policy was a blunt tool, considering the sticky inflation.
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