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Annual consumer price inflation rose to 5.6% in February from 5.3% in January, the second consecutive increase after two months of moderation at the end of 2023. This is the highest it's been since October last year.
The February number was worse than expected. Economists polled by Reuters predicted that the consumer price index (CPI) would show inflation rising to 5.5%.
The latest inflation number is a further blow to interest rate cut hopes. The central bank's Monetary Policy Committee (MPC) is due to meet next week and will announce its decision on interest rates on 27 March. Most economists expect rates to remain unchanged as the MPC waits for consumer inflation to settle closer to the midpoint of its target range, which would be at around 4.5%.
The main contributors to the rise in February included housing and utilities, miscellaneous goods and services, and transport.
Fuel prices have been rising since the start of the year, with the price of Brent crude oil rising to a five-month high following Ukraine's attacks on Russian refineries and concerns about the impact on global petroleum supplies.
Although the outlook could change by the end of the month, the latest estimates from the Central Energy Fund (CEF) show that diesel prices may be lowered at the start of April, while petrol prices may rise. Fuel prices have climbed for three straight months and the CEF estimates indicate SA may be about to record a fourth consecutive increase for petrol.
READ | More bad news: Inflation isn’t slowing soon enough. Expect higher interest rates for longer
A 10.3% month-on-month increase in medical aid premiums pushed the annual rate for health insurance to 12.9%. Premiums for all types of insurance have increased by 9.5% over the past year, Statistics SA said.
Food and beverage inflation slowed somewhat to February. But instant coffee (up 12.1% over the past year), black tea (up 10.1%) and rooibos tea (up 8.1%) showed sharp increases. Peanut butter prices were also up 14% from a year ago, while egg and potato prices climbed by more than 30%, Statistics SA reported.
However, sunflower oil was almost 13% cheaper than a year ago, with flour, rusks and pasta prices also lower than in February 2023.
