Home South African SA consumers will have to tighten their belts once again

SA consumers will have to tighten their belts once again


The February headline inflation rate has climbed to a four-month high. According to Anchor Capital, inflation edged up slightly to 5.6% year-on-year, from 5.3% YoY in January.

The February headline inflation rate climbed to a four-month high. File picture

THE FEBRUARY headline inflation rate has climbed to a four-month high. According to Anchor Capital, inflation edged up slightly to 5.6% year-on-year (YoY), from 5.3% YoY in January.

This is not the best news for South African consumers as the figures show that we have moved further away from the 4.5% midpoint of the SA Reserve Bank’s target band.

We are still within the central bank’s 3% to 6% target range.

Casey Sprake, an investment analyst at Anchor Capital, noted that product categories that drove much of the upward momentum include housing and utilities, miscellaneous goods and services (most notably, insurance), food and non-alcoholic beverages and transport.

“It is important to note that the February CPI release includes the bi-annual survey of medical health insurance costs, which account for 7.1% of the CPI basket,” Sprake said.

Subsequently, the 10.3% month-on-month (MoM) increase in medical aid premiums took the annual rate for health insurance to 12.9% YoY.

Anchor Capital noted that premiums for all types of insurance have increased by 9.5% over the past year.

The transport category also added to the rather large dent in our pockets, as this saw an annual rise of 5.4%, driven mainly by increases in vehicle and fuel prices.

“More positively, however, inflation for food and non-alcoholic beverages slowed to 6.1% in February, with most food price categories recording lower annual rates. Notably, meat and egg prices are recovering from the impact of avian influenza, while the fruit and vegetable segment is rebounding from past challenges with harvests and quality, exacerbated by irrigation difficulties linked to power outages,” Sprake added.


Sprake argued that SA consumers will have to continue to fasten their belts even tighter as inflation is likely to continue to rise over the short term.

She did note, however, that the higher inflation will only increase for a short while.

“We believe that the general trend for this year will be downward, albeit in a non-linear manner. March has recorded an additional petrol price increase to February’s R1.21/litre rise, which will exert some marked upward pressure on the next inflation reading. Overall, fuel prices have been adding to volatility in the inflation figures.”

She noted that April is on course for only a small petrol price hike, of around R0,14/litre, as the international Brent crude oil price has dropped in rand terms.

“Nonetheless, we anticipate some moderation in consumer prices driven by a continued easing in food prices, which should help counterbalance the projected uptick in fuel costs. Moreover, core inflation (particularly that of goods) will likely remain subdued as consumer demand continues to be constrained by the pressures of elevated interest rates,” Sprake concluded.

In a personal finance report by Nedbank, the institution noted that household finances stabilised somewhat in the last quarter of 2023.

The bank, however, did note that real personal disposable income (PDI) increased only by 0.1%, after shrinking over the previous three quarters.

In terms of jobs, the Quarterly Employment Survey illustrated that total employment declined by 1.8% quarter-on-quarter in the last quarter of 2023, with permanent and temporary jobs down by 0.1% and a sharp 13.5%, respectively.

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