Excluding non-alcoholic beverages, food alone increased a 9,1% year- on-year. This was the highest annual increase since February 2012.
In April, inflation rose at 6, 1% year- on-year, with food prices rising at 7, 8% year- on -year compared to 7 % year –on-year in March.“Most types of meat continue to experience inflationary pressures with the group showing an annual increase of 8, 2%,” reported Stats SA.
The bread and cereals group experienced a year-on-year increase of 10,1%, almost similar to the 10,2% year-on-year increase in the previous month.
“Tea (Ceylon) prices increased by 1, 1% from April 2014, leading to an annual increase of 8, 5%,.” According to Stats SA.
Isaac Matshego, chief economist at Nedbank, said most economists were expecting the consumer price index (CPI) for May to increase, considering the volatility of the rand and food prices.
He expected inflation to exceed the upper limit of the Reserve Bank’s target range of 3% to 6% for the time being, as the weaker rand led to higher fuel costs.
As a result of the stubborn inflation, Vunani Securities predicted the repo rate would be raised by between 25 and 50 basis points in July.
“We continue to expect a hike in interest rates this year as inflation will not be within target,” said Vunani Securities economist Ilke van Zyl.
She also expected inflation to increase further next month, mainly due to instability of the rand and food prices driven by an increase in maize prices in January before decelerating to 6,4% in August.
