Analysts expect South Africa’s September consumer price inflation (CPI) to accelerate to either 5% or 5.1% from the 4.9% August inflation rate.

FNB economist Siphamandla Mkhwanazi said the bank expects inflation to rise to 5.1%, an increase of 0.4% month-on-month. Nedbank economist Tachin Ramnath and Tshepo Moloi, economist at the Bureau for Economic Research, said their forecasts show respective CPI increases of 0.3% and 0.2% month-on-month for September, taking the estimation of headline inflation to 5%.

Stats SA is due to release the country’s CPI figures on Wednesday. According to the statistical service, after moderating to 4.6% in July, CPI returned increased to 4.9% in August, returning to the 4.9% posted in June and closer to the recent peak of 5.2% in May.

Headline inflation was up by 0.4% month-on-month while core inflation increased slightly to 3.1% year-on-year. The main contributors were transport, alcoholic beverages and tobacco.

The agency said after slowing to 15.2% year-on-year in July, fuel inflation accelerated to 19.6% year-on-year and 4.9% month-on-month in August, while electricity prices increased by 0.3% month-on-month to post 13.9% for the year to the end of August.

Food and non-alcoholic beverage inflation increased to 6.9% year-on-year from 6.7%. Stats SA explained that the subcategories driving those pressures in August were meat (up 0.8% month-on-month and 10.7% year-on-year), vegetables and other foods.

The main contributors to higher CPI expectations in September include the broad food and transport categories, said Mkhwanazi, adding that petrol prices increased by R0.04 and that core inflation – the change in the costs of goods and services, which does not include those from the food and energy sectors – is also expected to slightly rise.

The increase in fuel prices has been noted as a concern for the global and local economy, following higher averaged brent crude cost at $82.5/bbl so far in October, up from roughly $75/bbl in September.

Moloi said the Central Energy Fund, an agency of the department of mineral resources, provided a mid-month update of the domestic petrol price recovery on Friday.

“Given the sharp oil price rise and a weaker rand so far in October, unsurprisingly, a large petrol price hike is on the cards for November.”

“The average under recovery for 95 octane petrol up to October 14 was at 98c/litre, while for diesel it was more significant at R1.42/litre. The implication of a sharp rise in fuel costs in November is for South African headline CPI to accelerate in quarter four of 2021,” said Moloi.

The AA also warned of imminent fuel price hikes, saying it did not expect global oil prices to ease off in the short-term as the northern hemisphere enters the winter period.

In a note published on Monday on its website, the association inferred that predicted fuel price hikes for the month of November would have “catastrophic” results.

“The current picture is showing petrol up by 99 cents a litre, and diesel and illuminating paraffin higher by a whopping R1.42 a litre. This will push 95 ULP inland above R19/l (close to R19.30/l) and R17/l for diesel.”

“Taking this potential increase into account, the price of a litre of fuel inland [95 ULP] will have increased from R14.86/l in January to R19.30/l in November – a 30% increase over 11 months,” the AA said.

The association said that the hikes in diesel and illuminating paraffin would be the largest in South African history, “bearing in mind that this is only based on half a month’s data”.

SOURCE:

‘Catastrophic’ rise in petrol prices pushes up SA inflation | Citypress (news24.com)