June inflation rises due to food, housing, and alcohol costs

The increase in the cost of living moved up to 3% in June from the same month a year ago, driven mostly by food and non-alcoholic beverages, housing and utilities, alcoholic beverages, and tobacco.

This follows a flat reading of 2.8% in May compared to April, while March was a lower 2.7% - improvements on both January’s and February’s 3.2% print.

On Wednesday, Statistics South Africa said housing and utilities went up 4.4% year-on-year, food and non-alcoholic beverages gained 5.1%, while alcoholic beverages and tobacco increased 4.4%.

However, month-on-month, the increase in food, non-alcoholic beverages, sin products, as well as housing and utilities all increased at less than one percentage point.

Finance Minister Enoch Godongwana, in his third iteration of the National Budget in May, hiked the so-called sin taxes, with booze going up 6.75% and cigarettes by 4.75%. Those who smoke cigars and pipe tobacco saw a 6.75% increase.

Fruits, nuts, and vegetables had the fastest rate of increases in the food category, while wine saw the biggest price increase in alcohol. When it comes to housing and utilities, power and water were the main culprits for the increases.

Ahead of the release of the print, Old Mutual chief economist Johann Els expected a figure of 2.9%. “But there's high forecast uncertainty with the quarterly rental survey and, of course, food prices that's been impacted, especially on the red meat side by foot and mouth disease. So, while I've got 2.9% in the forecast, I wouldn't be surprised to see a 3% or 3.1% number,” he said.

Interestingly, inflation in rural areas was 3.3% against the national rate of 3%.

IOL