Inflation ticks up

South Africa’s inflation rate nudged up to 4.6% in February from January’s 4.5% according to Statistics SA.

This is bad news for the South African Reserve Bank (Sarb), which is widely expected to cut the repo rate tomorrow. This increase pushes it past the 4.5% midpoint of the bank’s monetary policy target range,  reducing the space it has to cut rates.

The bank is under pressure to cut rates as a way to boost the economy, in the wake of how the rapidly spreading Covid-19 is having on business activity around the world. 

Stats SA attributed the increase in inflation to hire food and beverages prices.

“The annual rise in food and non-alcoholic beverages was 4.2%, higher than the 3.7% recorded in January. Annual bread and cereals inflation slowed from 6,0% in January to 4,8% in February. Annual meat inflation increased from 2.4% to 4.1%.”

Higher medical cost also played a part in the rise with doctors’ fees up 5.1% than where they were a year ago, and hospital fees rising 3.9% over the same period. Dental bills also rose with dentists’ fees increasing 4.8%.

Consumers are also paying more for medical insurance, as well as private-sector medical practitioners and hospitals. “Medical aid fees increased by 9% over the last year. This is higher than that recorded in 2019 (8.3%) and 2018 (8%), but lower than the figure recorded in 2017 (9.8%).”

Medicine prices also ticked up.  

“Prices for medicines are surveyed every month. Medical products recorded an annual increase of 6.4%. Pain killers are 10.2% more expensive than they were a year ago and vitamin prices have increased by 9.1%.”