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Category: Prices and inflation
Date: 19 February 2020
Date: 19 February 2020
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In this article we take a in depth look at the latest inflation numbers for South Africa (for January 2020) and focus on the inflation rates of the various provinces as well as some of the main product categories contained within the CPI basket.
Note all data from Statistics South Africa |
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South Africa's inflation rate for January 2020 came in at 4.5%
While this is the 2nd consecutive month for which South Africa's inflation rate increased, those keeping an eye on inflation should remember that inflation for January 2020 was mainly driven by higher inflation rates in the Western Cape (well above the national average) and the strong increase in the inflation rate of non durable goods such as food and alcoholic beverages (which tends to increase sharply in January after it declines in December over the festive period)
The summary below shows the inflation rates per province in South Africa for January 2020
Other noteworthy inflation numbers for South Africa in January 2020
Finally after suggesting for a few months that the South African Reserve Bank (SARB) monetary policy committee (MPC) should cut interest rates in South Africa they obliged by cutting rates a mere 25 basis points. But it is at least a cut but hardly enough to get the economy of South Africa going get millions of South Africans out of their debt trap.
The South African Reserve Bank should not be worried about the increasing inflation at this point in time as its mostly driven by strong inflation in the Western Cape and strong inflation in non-durable goods such as food. So the underlying inflation is not being driven by increased consumer spending on nice to have such as clothes, furniture, electronics etc, as the inflation of semi-durable and durable goods are still very subdued.
The summary below shows the inflation rates per province in South Africa for January 2020
- Western Cape: 5.1%
- Limpopo: 4.7%
- South Africa: 4.5%
- Northern Cape: 4.4%
- Gauteng: 4.4%
- Mpumalanga: 4.2%
- North West: 4.1%
- Free State: 4.0%
- KwaZulu-Natal: 4.0%
- Eastern Cape: 4.0%
Other noteworthy inflation numbers for South Africa in January 2020
- Pensioners inflation: 4.6%
- Inflation for services: 4.0%
- Inflation for all goods: 4.9%
- Inflation for durable goods: 2.3%
- Inflation for semi-durable goods: 1.8%
- Inflation for non durable goods: 6.1%
Finally after suggesting for a few months that the South African Reserve Bank (SARB) monetary policy committee (MPC) should cut interest rates in South Africa they obliged by cutting rates a mere 25 basis points. But it is at least a cut but hardly enough to get the economy of South Africa going get millions of South Africans out of their debt trap.
The South African Reserve Bank should not be worried about the increasing inflation at this point in time as its mostly driven by strong inflation in the Western Cape and strong inflation in non-durable goods such as food. So the underlying inflation is not being driven by increased consumer spending on nice to have such as clothes, furniture, electronics etc, as the inflation of semi-durable and durable goods are still very subdued.
Next up lets take a look at the inflation rate of the various expenditure deciles in South Africa. Basically the inflation rate of the poor compared to that of rich. Decile 1 is the 10% of households in South Africa that spends the least amount of money (the poorest 10% of Households in South Africa), while Decile 10 is the 10% of Households in South Africa that spends the most amount of money (the richest 10% of Households in South Africa)
So a pretty mixed bag in terms of inflation for the rich, poor and middle class in South Africa. The poor tends to experience higher rates of inflation when prices of non-durable goods such as food, alcohol and tobacco increase rapidly, while the rich tend to consume more services (such as plumbers,electricians etc.), and prices of services tend to increase at a more stable rate but also tends to remain higher, while prices of non-durable goods such as food can see significant increases and decreases over a very short period of time. But currently the poorest of the poor is hardest hit by the latest inflation numbers in South Africa
- Decile 1 (poorest 10% of Households): 5%
- Decile 2: 4.6%
- Decile 3: 4.2%
- Decile 4: 4.2%
- Decile 5: 4.0%
- Decile 6: 3.7%
- Decile 7: 3.9%
- Decile 8: 4.2%
- Decile 9: 4.6%
- Decile 10 (richest 10% of Households): 4.7%
So a pretty mixed bag in terms of inflation for the rich, poor and middle class in South Africa. The poor tends to experience higher rates of inflation when prices of non-durable goods such as food, alcohol and tobacco increase rapidly, while the rich tend to consume more services (such as plumbers,electricians etc.), and prices of services tend to increase at a more stable rate but also tends to remain higher, while prices of non-durable goods such as food can see significant increases and decreases over a very short period of time. But currently the poorest of the poor is hardest hit by the latest inflation numbers in South Africa
Lastly lets take a look at the year on year inflation rate of various product categories for January 2020:
So education and transport (largely driven by a 13.7% increase in year on year fuel prices) recorded strong year on year increases while clothing and footwear and communications recorded very low levels of inflation over the course of the last 12 months.
- Food and non-alcoholic beverages: 3.7%
- Alcoholic beverages and tobacco: 5.2%
- Clothing and footwear: 2.2%
- Housing and utilities:4.7%
- Household content and services: 2.7%
- Health: 5%
- Transport: 6.4%
- Communication: 0.5%
- Recreation and culture: 0.8%
- Education: 6.7%
- Restaurants and hotels: 2.4%
- Miscellaneous goods and services (largely made up by medical, vehicle and household content insurance): 5.7%
So education and transport (largely driven by a 13.7% increase in year on year fuel prices) recorded strong year on year increases while clothing and footwear and communications recorded very low levels of inflation over the course of the last 12 months.