Inflation down to 4.1%, but without Eskom it would be even lower

Inflation fell to 4.1% in September, down 0.2 percentage points on the August figure.

The consumer price index (CPI) has now been below 4.5% for the past three months, Stats SA said on Wednesday.

“More significantly, it has remained below the SA Reserve Bank’s 6% monetary policy ceiling since April 2017,” it said in a statement.

Product groups with the largest weighting in the inflation basket – including food and non-alcoholic drinks, housing and transport – had the most influence in keeping the headline rate at modest levels.

“Together, these three categories make up over half of the basket and all three recorded an annual increase below 5% in September.”

The product groups with the highest annual price increases in September were electricity (11.8%) and university boarding fees (10.7%).

The cost of a bottle of wine is up 10.2% in the last year, and StatsSA blamed this on the four-year drought in the Western Cape which led to the lowest harvest in 14 years. “Strong export demand further limits local availability,” it said.

Similarly, “bread and cereal prices have increased significantly in the past 12 months due to poor harvests”.

Maize, a staple for millions of SA’s poorest people, had been particularly hard hit. “Super maize prices increased 15.7% year-on-year in September, and special maize by 31.3%. Brown bread prices were up by 7.6%.”

On the positive side, cellphone prices fell by 7.3% and the cost of holidays was down by 6.6%.

Stats SA explained cheaper cellphones by saying the CPI was a “constant quality” index. “In simple terms, this means that the improvement in phone features outstrips any price increases introduced when new models are released.”

It said cheaper domestic holiday packages may stem from the current poor economic conditions. “The Western Cape has seen the biggest provincial decrease in package prices, registering a 9.3% fall over the last 12 months.”