Athlone Stadium
You are Here: News -> July CPIX records at an all time high 13%

July CPIX records at an all time high 13%

Return to previous page.

July CPIX records at an all time high 13%

by Bathandwa Mbola
27 Aug 2008
BuaNews Online
BuaNews Online

Price increases in food, fuel and electricity as well as transport have pushed July's Consumer Price Index (CPI), excluding interest on mortgage bonds (CPIX), to an all-time high of 13 percent year-on-year (y/y).

The year-on-year increase in the CPIX for July 2008 was 1.4 percentage points higher than the 11.6 percent y/y increase recorded at June 2008, reported Statistics South Africa on Wednesday.

This is the 16th month running that CPIX has been above the Reserve Bank's 6 percent upper inflation target limit.

The previous all-time high before June this year for CPIX was the 11.3 percent set in 2002.

Stats SA said the annual increase in the CPIX for the historical metropolitan and other urban areas was mainly due to relatively large annual contributions in the price indices for food (+5.1 percentage points), transport (3.2 percentage points), fuel and power (1.1), housing (0.9), household operation (0.7), medical care (0.6), education (0.4) and personal care (0.3).

The increase in the CPI for the historical metropolitan areas was mainly due to relatively large annual contributions in the price indices for food (+4.3 percentage points), transport (3.5), housing (2.3), fuel and power (0.8), housing operation (0.6) medical care (0.6), and education (0.4).

Annual CPIX for 2007 was at 6.5 percent from the 4.6 percent in 2006, while annual CPI was at 7.1 percent from the 4.7 percent in 2006.

Economists had believed that the CPIX, which is used by the central bank for its inflation target, would be 13 percent, raising hopes of rate cuts next year.

The bank left the repo rate at 12 percent in August on the better inflation outlook, halting an upward cycle that saw rates rise 5 percentage points over two years.

"The figure is broadly in line with our expectations ... It just reflects a very strong growth," Econometrix Treasury Management (ETM)Market Analyst George Glynos told BuaNews.

According to Mr Glynos this could be the peak in inflation, depending on the kind of petrol price cut that we see for the September figure.

Economists believe that inflation will continue rising until the new consumer inflation basket is introduced in January.

The new CPIX basket will result in some items used to measure inflation being excluded or having a lesser effect on the CPIX weight.

"Next year's re-weighting exercise will result in a lower level of consumer inflation.

"In addition, the mortgage interest rate component of CPI will be done away with, replaced by the income which can be charged for renting homes instead of living in them," Investec Economist Annabel Bishop told BuaNews, adding that CPIX inflation would potentially fall away.

Whether CPIX inflation would be replaced by CPI inflation as the targeted measure is uncertain but the new measure to be targeted is likely to be announced at November's Medium-Term Budget Policy Statement (MTBPS), continued Ms Bishop.

"We expect no more interest rate moves this year," she said, adding that the sharp drop in the level of inflation in 2009 is likely to cause the SARB to cut interest rates significantly, beginning with a 50bp easing at the April MPC meeting.

Further the potential cut of R1 a litre is being scheduled for September, which will provide much relief to the inflation outcome in that month. - BuaNews

Return to previous page.

From our Directory

Are you looking for a local pre-school to send your children? The Good Shepherd Christian Pre-school in Crawford in a place where they can learn to read, classical music appreciation, number recognition and lots more. Give them a call now on 021-6914466.

M. Adams - Secretarial and Administration services, located in Surrey Estate, offer help in the field of Secretarial work related to Cipro and Administration functions, such as those relating to SARS Registrations. Call them now on 082-5655258.

Latest movies at the lowest prices! Largest range of DVD's and videos availble at Universal Film, Video and DVD Agencies. Give them a call on 021-6374895

Contact Us | About | Copyright | Advertising | Disclaimer

Website Design by BMSC-Online