Economic News

South Africa’s Inflation Surge: Food Prices Skyrocket, Sectors Struggle

Published by
WIlliam Dube
  1. South Africa’s inflation rate unexpectedly rose to 7.1% in March, primarily driven by food and non-alcoholic beverages, housing and utilities, transport, and miscellaneous goods and services.
  2. Food inflation continued its upward trend, with prices in the food and non-alcoholic beverages sector increasing by 14.0% over the 12 months leading up to March, the largest annual spike in 14 years.
  3. Transport inflation decreased due to lower fuel prices, while education fees experienced an overall increase of 5.7% in 2023, with textbook prices seeing the largest annual jump since October 2009.

South Africa’s inflation rate in March took an unexpected turn, rising to 7.1% from February’s 7.0%, contrary to market predictions of an easing in prices for the month. The latest data from Stats SA reveals that core inflation remained unchanged at 5.2%. This development caught economists off-guard, as many had forecasted a slight dip to 6.9%.

The primary factors driving the 7.1% annual inflation rate included food and non-alcoholic beverages; housing and utilities; transport; and miscellaneous goods and services. Food and non-alcoholic beverages experienced a significant 14.0% year-on-year increase, contributing 2.4 percentage points to the overall figure. Housing and utilities saw a 4.0% increase year-on-year, adding 1.0 percentage point, while transport rose by 8.9%, contributing 1.3 percentage points. Lastly, miscellaneous goods and services experienced a 5.9% increase, adding 0.9 of a percentage point.

The annual inflation rate for goods in March dropped slightly to 9.4% from February’s 9.5%, while the rate for services also saw a minor decrease to 4.5% from 4.6%.

Food inflation, particularly in the food and non-alcoholic beverages sector, continued its upward trajectory, with prices escalating by 14.0% over the 12 months leading up to March. This significant increase represents the largest annual spike since the 14.7% rise observed in March 2009, 14 years ago. In March, various product categories such as milk, eggs, and cheese; sugar, sweets, and desserts; fruits and vegetables; and other food products experienced inflationary pressures.

On the other hand, bread and cereals, meat, oils and fats, and fish demonstrated slower growth. Bread and cereals’ annual increase was 20.3% in March, down from 20.5% in February, while meat inflation inched lower to 10.6% from 11.4% in February. The prices of oils and fats decreased for the seventh consecutive month, bringing the annual rate down to 16.0% from 16.7%.

Transport inflation saw a decrease on account of lower fuel prices, with the transport index rising by 8.9% in the 12 months to March, down from the 9.9% annual rate recorded in February. This drop was primarily driven by eight consecutive months of slowing fuel inflation, which stood at 8.1% in March, a significant reduction from February’s 10.9% and the 56.2% peak in July 2022. Despite the overall decrease, fuel prices increased by 4.5% between February and March, largely due to the price of inland 95-octane petrol rising by R1.27 per litre.

Education fees, which are surveyed once a year in March, experienced an overall increase of 5.7% in 2023, higher than the 4.4% rise recorded in 2022. Fee increases were observed across primary and pre-primary schools (up 6.3%), secondary schools (up 5.8%), and tertiary institutions (up 5.3%). Other education-related products and services that registered price increases included crèches (up 4.6%), university boarding fees (up 6.7%), textbooks (up 11.3%), and school bags (up 10.6%). The 11.3% increase in textbook prices represents the largest annual jump since October 2009 (12.0%).

Other notable price changes in March included the implementation of new excise taxes on alcohol and tobacco products, leading to a 2.2% monthly increase. However, the annual rate dipped slightly to 6.2% from 6.3% in February.

The first quarter survey of housing rentals also factored into the Consumer Price Index (CPI) for March. Annual inflation for actual rentals remained unchanged from December at 2.5%, while owner-occupied housing saw a minor decrease to 2.7% compared with December’s 2.8% reading.

In March, inflation for household contents and services climbed to 6.9% from 6.2% in February, marking the highest annual increase since June 2009 (7.0%). Prices for appliances, tableware, and equipment rose by 7.7%.

Domestic worker wages saw a 1.2% increase in March from December, resulting in a 5.2% annual rise – the highest since February 2019 when the same rate was recorded.

Prices for personal care items surged by 11.1% in the 12 months leading up to March. This represents the highest annual rate since the 12.0% increase observed in October 2009.

The tables below highlight the products that recorded the most substantial percentage price increases in March. In summary, South Africa’s inflation rate in March defied market expectations, driven primarily by food prices, housing and utilities, transport, and miscellaneous goods and services. As the country grapples with these economic challenges, it remains to be seen how future inflation rates will be impacted by various sectors and their respective struggles.

Table 1: Key Inflation Figures by Sector

SectorYear-on-Year IncreaseContribution to Total Inflation
Food & Non-Alcoholic Beverages14.0%2.4 percentage points
Housing & Utilities4.0%1.0 percentage point
Transport8.9%1.3 percentage points
Miscellaneous Goods & Services5.9%0.9 of a percentage point
Caption: Table 1 presents the year-on-year increase and contributions to total inflation for various sectors in South Africa.

Table 2: Education Fee Increases in 2023

Education Institution/ServiceFee Increase in 2023
Primary & Pre-Primary Schools6.3%
Secondary Schools5.8%
Tertiary Institutions5.3%
Crèches4.6%
University Boarding Fees6.7%
Textbooks11.3%
School Bags10.6%
Caption: Table 2 shows the fee increases for various education institutions and services in South Africa in 2023.
WIlliam Dube

William Dube is a finance and economic news expert with over 10 years of experience in economic anaylsis, financial product assessment and market analysis. With a numerous certificates from prestigious universities including but not limited to Yale University and the University of Pennyslivenia. William specializes in providing insightful news developments in South Africa and commentary on investment strategies, risk management, and global economic trends. You can contact him on william@rateweb.co.za

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WIlliam Dube

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