Annual headline inflation climbed above the 4,5% midpoint of the South African Reserve Bank’s monetary policy target range, accelerating to 5,2% in May from 4,4% in April. This is the highest reading since November 2018 when the rate was also 5,2%.

The 5,2% annual change in May comes off a low base recorded in May 2020, when fuel prices were low. Core inflation (this is CPI excluding food & non-alcoholic beverages, fuel and energy) was 3,1% in May 2021, much lower than the headline rate. This hints at the notable impact that fuel and food inflation has had on overall (headline) inflation levels.

Fuel is 37% more expensive than it was a year ago

Despite a small monthly drop in the fuel price in May, the annual increase quickened to 37,4% from 21,4% in April. Petrol prices were 41,8% higher in May compared with the same month the previous year, while diesel was 27,0% more expensive.

Vehicle prices climbed by 6,5% in the year to May. Other running costs for vehicles rose by 8,9% on an annual basis and by 0,8% from April 2021 to May 2021. Most notably, tyre prices increased on average by 3,3% from April 2021.

Food inflation edges up to a 46-month high

Annual food & non-alcoholic beverages inflation accelerated to 6,7% in May from 6,3% in April. May’s reading is the highest since July 2017. Meat, fish, oils & fats, and sugar, sweets & desserts recorded rates higher than 6,7%.

Annual meat inflation has stubbornly remained above 6,0% since October 2020, climbing to 8,5% in May. Prices for fish products increased at a brisk 7,0%, slightly lower than April’s 8,1%.

Cooking (sunflower) oil prices continue to surge, increasing by 30,3% from May 2020 and by 8,5% from April 2021. The average price of a 750ml bottle of sunflower oil, for example, was R20,99 a year ago, rising to R29,39 in May.

Higher cooking oil prices have driven inflation in the broader oils and fats category, which recorded an annual rate of 20,0% in May, up from 16,7% in April.

The sugar, sweets & desserts index increased by 8,7% on an annual basis, up from 8,0% in April. Over the past year, white sugar prices have risen faster (11,5%) than brown sugar prices (4,0%). However, from April to May, brown sugar recorded a higher monthly increase (1,9%) compared with white sugar (0,3%).

Alcoholic beverages & tobacco products registered an annual change of 5,8%. Wine prices have climbed by 7,2% and tobacco prices by 6,6%.

Inflation pressure shifts from services to goods

It is notable how the drivers of inflation have shifted over the past 12 months. In May 2020, the highest annual price increases were recorded by services such as education, insurance, and housing & utilities. The annual rate for services was 4,1% in May 2020 and for goods the rate was flat.

By May 2021, services inflation had eased to 2,7% and for goods the rate had climbed to 8,0%. The product groups that recorded the highest annual rates in May 2021 were transport, food & non-alcoholic beverages, and alcoholic beverages & tobacco.

For more information, download the May 2021 Consumer Price Index (CPI) release here.

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