12 December 2019 – Prices of food and other essentials increased at a slower pace in November, giving cash-strapped South African consumers a welcome reprieve ahead of the Christmas holidays.
Figures released by Statistics SA on Wednesday showed that the country’s annual consumer price inflation decreased to 3.6% in November from 3.7% in October.
The last time the annual CPI was lower than this was in December 2010 when it stood a 3.5%. It was also the third month in a row that the CPI fell. It decreased from 4.3% in August to 4.1% in September and then 3.7% in October.
Statistics SA said prices of food and non-alcoholic beverages increased at an even slower pace, contributing only 60 basis points to the total CPI of 3.6%.
The items that pushed up the cost of living the most were miscellaneous goods and services, whose prices increased by 5.7% year-on-year followed by housing and utilities, which increased by 4.8% year-on-year. The rise in housing and utilities contributed the most to the CPI increase at 1.2 percentage points.
Economist Mike Schussler said if it wasn’t for increases in healthcare-related costs and things like water and electricity, the overall inflation would have been even lower than the reported 3.6%.
While that is good for consumers, Schussler said low inflation is starting to affect the economy because businesses like retailers can’t afford to increase prices even if their inputs go up. Struggling consumers aren’t buying enough as it is. If retailers hike their prices, they will sell even lower quantities.
“If you look at retail inflation for example, it’s been under 3% for three years now. Businesses know consumers are under pressure. They are trying their best to keep prices low. We are literally in dire straits. Consumers’ pockets can’t stretch anymore. So, they spend on things that they have no choice on. These are factors that are really driving inflation,” said Schussler. Source (Fin24)