There were no surprises with headline inflation slowing in line with market expectations to 4.6% last month, from 4.9% in June. File Picture: African News Agency (ANA)
DURBAN - THERE were no surprises with headline inflation slowing in line with market expectations to 4.6% last month, from 4.9% in June.
This was what Nedbank said in reaction to the Consumer Price Index (CPI) July 2021 report released by Statistics SA (Stats SA) on Wednesday which showed that it increased by 1.1% month-on-month last month.
According to the statistics, the main contributors to the 4.6% annual inflation rate were food and non-alcoholic beverages; housing and utilities; transport; and miscellaneous goods and services.
The figures showed that food and non-alcoholic beverages increased by 6.7% year-on-year, and contributed 1.1 percentage points to the total CPI annual rate of 4.6%. Housing and utilities increased by 3.8% year-on-year, and contributed 0.9 of a percentage point. Transport increased by 8% year-on-year, and contributed 1.1 percentage points. Miscellaneous goods and services increased by 4.2% year-on-year and contributed 0.7 of a percentage point. Last month, the annual inflation rate for goods was 6.7%, down from 7.1% in June; and for services it was 2.7%, down from 2.9% in June.
“Much of the slowdown over June and July reflects the impact of last year’s base when inflation normalised somewhat from the depths of strict lockdown,” Nedbank’s economic unit said. It said the data confirmed that inflation was past its peak, though the upside risks remained elevated.
“Global supply chain disruptions are likely to persist as the Delta variant’s rapid spread has resulted in new lockdowns in many manufacturing hubs. Major ports worldwide also remain congested, struggling to clear backlogs. As a result, shipping and container tariffs continue to rise, adding to transport costs.”
“Given these cost-push pressures, inflation is forecast to edge up slightly, ending the year around 4.9%. However, the upside will be contained throughout by the country's subdued economic recovery, which was undoubtedly badly disrupted by July's mayhem and the sticky third wave.”
Retail trade sales figures for June 2021 from Stats SA showed an increase of 10.4% year-on-year.
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