South Africa's Inflation rate attains 13 years high

By: Chime Amara

The inflation rate in South Africa attained a 13 years high in July 2022, with the rate jumping to 7.8 percent YoY against the previous record of 7.4 percent recorded in June. This marked the third month of consecutive increase in the South African inflation rate.

South Africa is currently facing the highest inflation level ever since 2009.

According to the data released by Statistics South Africa (SSA) the consumer price index (CPI) rose by 1.5% between June and July 2022. This marks the fourth time since 2008 that the monthly increase was given as high as 1.5%.

The major inflation rate came from the energy sector. With fuel prices rising by more than 10%. This further increased the cost of transportation. Thus the cost of a taxi rose by over 9% in just one month. Generally, the cost of transportation was found to be present more than 16% more expensive than they were a year ago. Petrol cost is now 56% more expensive than its cost in 2021.

The second major contributor to the high inflation rate is seen in the sector. The rate of food inflation in the country increased by 9.7% YoY in July, against the previous record of 8.6% YoY witnessed in June. The major food inflation came from such food items as maize meal, (4.2%), white bread (2.8%) cake flour (6.3%).

Moreso, the cost of electricity rose to 7.5% on average, much lower than the 13.8% increase recorded last year.

More importantly, South Africa's Core inflation rate, which excludes food, nonalcoholic beverages, fuel, and electricity, rose to 4.6%, exceeding the Central Bank's target range of 3% to 6% .

Amidst the rising inflation rate, there seems to be massive productivity in the labor market with South Africas unemployment rate reducing to 33.9% in the second quarter (Q2) of 2022, against the previous record of 34.5% witnessed in Q1 2022.