Inflation in October surprises with jump to 7.6%

Consumer inflation rose to 7.6% in October.

  • Inflation in October surprised by rising to 7.6% as economists expected a slowdown.
  • The main drivers of inflation were food, transportation and household prices.
  • Bread, grains, meat and dairy are the main products affecting food inflation.
  • For more financial news go to News24 Business front page.

Inflation rose to 7.6% in October from 7.5% in the previous month.

Economists had expected inflation to fall to 7.4%.

Stats SA on Wednesday released figures showing a 0.4% month-on-month increase in October.

The main drivers of inflation were food and non-alcoholic beverages, which rose 12% year-on-year, and transportation, which rose 17.1%.

Home and utility prices rose 4.3% year over year, also contributing to the increase.

Bread, cereal, meat and dairy are the top product groups that have driven food inflation, said Patrick Kelly, chief director for price statistics.

“The bread and cereals category continues to see high levels of inflation, with the annual rate rising to 19.5% compared to 19.3% last month,” Kelly said.

Big monthly price increases were recorded for sweet biscuits, macaroni and cornmeal – Stats SA highlighted.

Annual meat inflation rose to 10.5% and m from 9.9% in SeptemberMilk, egg and cheese prices rose 10.5% — the highest rate since February 2017, Kelly said.

Hot beverage prices rose 14%, also the highest annual figure since February 2017.

The oil and fat products category, which has fueled food inflation for many months, saw disinflation for the second straight month. Prices fell 1% after a 6.1% drop in September.

Transport inflation was driven by vehicle prices, which rose to 6.1% from 5.8% in September. This is largely due to higher used car prices, which are on average 14.5% more expensive than a year ago, Kelly said.

Lower gasoline prices have pushed fuel inflation down for the third straight month.

As for household appliances, detergents such as washing powder and dishwashing liquid, and health insurance premiums all reflected increases.

Economists expect the Reserve Bank to hike interest rates by 75 basis points at its next meeting on Thursday – amid risks surrounding the inflation outlook and a “softer” rand exchange rate, the Bureau for Economic Research said in its weekly review.

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