Consumer inflation for May steady at 5.2%, in line with forecasts

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South Africa’s consumer inflation for May remained unchanged at 5.2% year on year. That was in line with analysts’ forecasts.

The Consumer Price Index also reflects a welcome softening in food inflation. The latest print comes after two consecutive months of declines but remains above the central bank’s preferred target of 4.5%.

The rates for four of the twelve product groups remained steady between April and May. These include food & non-alcoholic beverages, housing & utilities, education, and household contents and services.

Consumer food inflation slowed to 4.3% in May, down from 4.4% in the previous month. The deceleration was primarily driven by price moderations in “bread and cereals”, “milk, eggs and cheese”, “oils and fats”, and “sugar, sweets and desserts. Prices also slowed down for restaurants and hotels, health and clothing, and footwear.

Video: CPI expected to remain flat at 5.2%

Standard Bank Senior Economist Elna Moolman says, “For consumers, this implies gradual relief if we consider that consumer inflation is more than a percentage point lower than…cut interest rates later this year.”

“In June, we expect consumer inflation to moderate to 5% because of the continued deceleration of…into our inflation numbers,” adds Johannes Khosa, Senior Economist at Nedbank.

Core inflation, which excludes food, non-alcoholic beverages, fuel and energy prices remained at 4.6%.

Analysts say with inflation still above the midpoint of the inflation target range, this will likely keep the Reserve Bank’s tone hawkish at its next meeting in July.