Consumer inflation spikes to 13 year high

Consumer inflation soared to 7.8% in July 2022 from 7.4% in June 2022. This is highest since May 2009 (13 year high).

The key drivers for the inflation overrun  were food, transport costs and non- alcoholic beverages.

Transport costs were up by 4,8% between June and July with fuel rising by 9,4%. Currently, fuel prices are 56,2% higher relative to twelve months ago. The price of a litre of petrol rose from R17,39 in July 2021 to R26,74 in July 2022. On the other hand, the average price for diesel increased from R16,58 to R26,61 per litre during the same period.

The annual rate for food and non-alcoholic beverages increased by 9,7% in July compared to the 8,6% recorded in June 2022.  

Electricity tariffs increased on average by 7,5% in July, to match the benchmark approved by NERSA.

We expect the South African Reserve Bank (SARB) to hike the repo rate to pass 10% mark by year end.  The global interest rate hikes especially the US Fed hikes are anticipated to continue to put pressure on the rand. As inflation continues to soar domestically, this points to more pressure on the consumer.