Big petrol price hike set to hit South Africa in February: economist – Archyde

South African consumers are unlikely to find respite in the coming months as both fuel and food prices are set to rise, says Annabel Bishop, Investec’s chief economist.

Commenting on South Africa’s latest statistics CPI data, Bishop noted that transport inflation rose to 16.8% yoy in December from 15% yoy in November as petrol prices rose 75 cents a liter.

“While there was a 68 c/l cut in January, there was a huge increase of around R1.30/litre builds up for February on the back of a rising global oil price. The price of Brent crude has hit $87.5 a barrel versus $73.5 a barrel a month ago,” she said.

Goldman Sachs Group said this week it sees prices flattening out $100 in the 3rd quarter of 2022, as consumption surprises on the upside. A R1.30 per liter hike in February would push South African petrol prices back above R20 per liter after a January drop had helped Delay at the pumps.

Looking ahead, food price inflation is expected to be higher as heavy rains have resulted in crop damage and delays in planting, Bishop said.

“Lower yields are therefore expected for crops such as sunflower seeds, corn, sorghum, soybeans, other dry beans and peanuts. The current La Nina phenomenon, which is expected to continue into the fall, is causing extreme rainfall in contrast to the dry conditions of Le Nino.”

Investec now expects 2022 CPI inflation to average closer to 5.3%y/y as the December figure provides a higher baseline for 2022 CPI numbers.

Bishop said December’s CPI pressure is also likely to bolster the South African Reserve Bank’s hawkish tone after November’s 25bp hike in repo rates. The SARB targets inflation over a six to twenty-four month horizon and may now seek to deliver another 25 basis point hike in January rather than waiting until March, she said.

The latest consumer price index shows that annual headline inflation rose to 5.9% in December 2021, from 5.5% in November 2021.

This is the highest annual increase since March 2017, when the rate was 6.1%, the statistics office said in a statement on Wednesday (January 19).

The main contributors to the annual inflation rate of 5.9% were food and non-alcoholic beverages; housing and utilities; Transport; and miscellaneous goods and services. Grocery and non-alcoholic beverages rose 5.5% year-on-year and contributed one percentage point to the overall CPI annualized rate.


Read: 6 things that are more expensive in South Africa in early 2022

Reference-www.nach-welt.com

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