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We take a look at South Africa's overall import inflation as measured by Statistics South Africa (Stats SA) Unit Value Indices (UVI) and compare it to the crude oil imports UVI. The analysis shows just how volatile crude oil import prices are compared to overall import inflation levels of South Africa
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Overall Import inflation compared to crude oil imports inflation
In a article a few days ago we looked at the value and quantity of crude oil being imported into South Africa during 2018, and today we compare the crude oil imports inflation to overall import inflation of South Africa.
The line chart above shows just how volatile the year on year changes in the crude oil imports are compared to that of South Africa's overall imports inflation. During 2018 the average year on year inflation experienced by the two categories were as follows:
Overall import inflation: -2.7%
Crude oil imports inflation: 32.1%
The highest rate of inflation measured during 2018 for the two categories were as follows:
Overall import inflation: 5.9%
Crude oil imports inflation: 63.5%
Both of the highs were measured during October 2018, and due to the fact that crude oil imports makes up roughly 14% of South Africa's total imports it is no surprise that the 63.5% year on year inflation in crude oil in October 2018 pushed the overall import inflation levels higher too, as crude is a big weighted item within South African imports.
Overall import inflation: -2.7%
Crude oil imports inflation: 32.1%
The highest rate of inflation measured during 2018 for the two categories were as follows:
Overall import inflation: 5.9%
Crude oil imports inflation: 63.5%
Both of the highs were measured during October 2018, and due to the fact that crude oil imports makes up roughly 14% of South Africa's total imports it is no surprise that the 63.5% year on year inflation in crude oil in October 2018 pushed the overall import inflation levels higher too, as crude is a big weighted item within South African imports.
While there is a lot of noise regarding second round effects of inflation and South Africa importing inflation when the Rand weakens, the current import inflation levels are very subdued, and this with a relatively weak exchange rate. The South African Reserve Bank (SARB), we believe raised rates in November 2018 not to curb our local inflation, but rather to protect the vulnerable Rand, and their base argument would be it is to ensure we do not import inflation due to a weaker currency. But based on the overall import inflation of the last year of -2.7% , there is little to no risk of South Africa importing inflation at this point in time, in fact import prices were deflationary during the lat year, compared to local inflation averaging 4.7% due to the large weight that fuel makes up in the South African consumer price index basket.