South Africa’s inflation rate increased marginally to 2.8% year-on-year in April, up from 2.7% in March, driven primarily by higher food prices. Despite this rise, the inflation rate remains below the central bank’s target range of 3% to 6%.
On a month-on-month basis, inflation was at 0.3% in April, slightly down from 0.4% in March.
Annual inflation for food and non-alcoholic beverages rose to 4.0% in April, the highest rate since September last year.
The increase in food prices is notable, with specific items experiencing significant price hikes.
For instance, bread and cereals saw an annual increase of 20.8%, while eggs cost R21.59 per tray of six in April, up from R20.38 a year ago.
Other food items like meat, oils, and fats showed mixed trends, with meat inflation slowing to 9.5% from 10.6% in March, and oils and fats slowing for an eighth consecutive month to 9.9% from 16% in March.
Economists had forecasted an annual inflation rate of 2.7%, and the slight increase has implications for the South African Reserve Bank’s monetary policy.
The bank’s governor, Lesetja Kganyago, has expressed a preference for a lower inflation target to boost the economy’s competitiveness.
However, Finance Minister Enoch Godongwana has been cautious, citing risks from poverty and unemployment.
A potential new inflation target might be announced soon, which could influence the rand and interest rate decisions.
