Consumer inflation eased in March, following a two-month uptrend noted According to Stats SA. The headline inflation rate softened to 5.3% from 5.6% in February.
Since September 2023, the rate has remained stable between 5% and 6%.
The monthly change in the consumer price index (CPI) was 0.8% in March, lower than the 1.0% increase in February.
The categories with the highest annual price changes in March were miscellaneous goods & services (up 8.5%), education (up 6.3%), health (up 6.0%), and housing & utilities (up 5.9%).
Education costs, surveyed annually in March, showed a 6.3% increase in 2024 compared to 2023, surpassing the 5.7% increase in 2023.
High schools experienced the most significant increase in 2024 (up 7.3%), followed by primary schools and tertiary institutions (both up 5.9%). Crèches raised fees by 6.0%, and university boarding costs increased by an average of 8.2%.
The rise in miscellaneous goods & services was mainly due to higher health insurance premiums. Health insurance prices rose by 12.9% in 2024.
Food and non-alcoholic beverage inflation slowed to 5.1% in March from 6.1% in February. Bread & cereals registered a softer annual increase of 5.0%, significantly lower than the recent high of 21.8% in January 2023.
Meat inflation also decreased in March, with an annual rate of 0.8%, notably lower than the recent peak of 11.4% in February 2023.
Annual inflation for sugar, sweets & desserts remained above 15.0% since June 2023, reaching 17.8% in March 2024.
Inflation for alcohol & tobacco was driven by annual increases in excise taxes, with a monthly increase of 1.9% in March and an overall increase of 4.5% in the 12 months to March.
Housing rents rose by 0.8% in March, while the transport index increased by 2.0% between February and March, mainly due to a 5.3% monthly rise in fuel prices. On average, petrol increased by 5.2% and diesel by 5.3%.
The March inflation figure, although better than expected, is unlikely to sway the South African Reserve Bank (SARB) from its hawkish stance on interest rates.
Most economic forecast suggest that the Monetary Policy Committee (MPC) will likely maintain interest rates for much of the year, with an initial 25 basis points (bps) reduction anticipated in September, followed by another 25 bps cut in November.
Economists at FNB have raised concerns that if the SARB persists with its high interest rates longer than required, it could push the country into a technical recession. In their recent Economic Weekly report,
FNB economists emphasized the growing financial strain on South African consumers due to the SARB's high interest rates.
FNB cautioned that prolonging the period of high interest rates beyond necessity could further impede economic growth and increase the risk of a technical recession.
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