Fin24

Petrol fuels inflation shocker

2012-10-24 10:53

Johannesburg - South Africa’s headline consumer inflation accelerated to 5.5% year-on-year in September from 5% in August, Statistics South Africa said on Wednesday.

Inflation also quickened on a month-on-month basis, to 0.9% from 0.2%t in August and against market expectations for a 0.6% print.

Economists had expected prices to rise by 5.2% year-on-year.

Nedbank economist Busisiwe Radebe said the majority of the increase came from housing, utilities and transport with mainly the petrol price that increased by about 8.6% month-on-month.

“We think inflation remains at more-or-less the 5% to 5.5% mark for the remainder of the year. The Monetary Policy Committee will take a wait-and-see approach.

“If this global monetary stimulus we see sparks some recovery later in the year, we expect rates to remain stable. But if something huge had to happen and the global economy had to step into a recession, then we can expect further easing.

“But our baseline view is that rates will remain stable with some reversal and policy easing possible in late 2013 or even 2014.”

The rand weakened to R8.7895/$ at 10:23 from 8.7550 before the data was released at 10:00.

The latest inflation figures follow the Reserve Bank's move to cut interest rates for the first time in 20 months in July partly because of softer-than-expected inflation prints, and said in September the risks to the inflation outlook were more or less balanced.   

Higher food and oil prices pose the main upside risk to the inflation outlook.

The bank also said wage settlements in the strike-ridden mining sector risked setting a precedent for wage demands generally in the economy.

The Reuters Econometer poll saw 2012 inflation forecasts trimmed slightly for this year.

Comments
  • SarelJBotha - 2012-10-24 11:00

    Clearly we need the regime to remove taxes from the petrol and diesel price. These are desperate time and desperate measures are needed.

      ben.alexander.16144 - 2012-10-24 11:06

      They never will.

      rob.gunning.1 - 2012-10-24 11:34

      lol

      frank.vankaapstad - 2012-10-24 11:54

      Inflation is a reality that everyone has to accept. Electricity prices have to rise as more people get connected to the grid and there is increased demand for coal, a depleting resource. Food prices will rise as calorie intake and meat consumption increases throughout developing nations. Climate change and increased extreme weather conditions across the globe witnessed during the last three years leading to widespread crop failures and a jump in corn and maze prices amplify the effect. In South Africa, farms being handed to incapable farmers through the Governments redistribution program WILL decrease output leading to further shortages. When the demand for minerals returns we'll see price increases in them too. We live in a world with finite resources yet we behave as if they are infinite. A massive change in Government policies as well as individual attitudes towards personal consumption and wastage are needed across the globe. Sadly this will not happen anytime soon because nobody takes a longterm view on anything. Civil unrest and inflation will be the reality.

  • justice.league.9469 - 2012-10-24 11:03

    With the raise in electricity costs, petrol and food: we can expect more strikes as people try to cope with the increased cost of living. Thus re-raising the cost of essentials again. A never ending cycle

      robqb - 2012-10-24 11:21

      Where/how do I as a pensioner go on strike? I was told that 7% was a nice increase. I agree, if my pension was 3x larger. My increase of R356 plus another R200 was taken by my Medical Aid. What about electricity, food, petrol? So glad my car gives me a tad over 16km/litre, so I only need to top up once a month. Government will never do away with or drop the tax on fuel. I mean, who's going to pay for the millions being wasted on charted planes for overseas trips? What's wrong travelling SAA?

      justice.league.9469 - 2012-10-24 11:32

      I feel your pain robqb: unfortunately we are nation, where 20% of population is taxed to the extreme to cater for the 80%, It is supposed a to be 50/50 split. Petrol and vat is the only common taxable.

      jurie.nel.3 - 2012-10-24 11:32

      Not enough status, Rob. That's why they don't travel SAA.

      alan.gernet - 2012-10-24 11:41

      Yeah - Pensioners and poor people feel the effects of inflation the hardest. I completely reject the official figure of approx 5% Inflation year on year. Look at the REAL increases in school fees, fuel, food, rent, transport, car parts and services, clothing, medical services, electricity and property and service taxes on a yearly basis and you will find the costs going up between 15-18%. But of course ..the Govt likes to mislead by basing the 'Official" inflation figures on an unrealistic basked of goods for the average household and income tax payer.

  • nicholas.graan - 2012-10-24 11:04

    At least we are not yet sitting at 1 000 000%

      jurie.nel.3 - 2012-10-24 11:33

      God forbid!

      kenpeg.dawson - 2012-10-24 11:42

      At this rate - NOT YET

  • ian.d.samson - 2012-10-24 11:07

    I want a 5.5% increase in my pension to keep apace with retailers' profiteering racket. Then Eksdom wants 16%, CoJ wants more money, everyone wants more money! What happens to us when we cannot afford to pay any more money?

      deon.louw.7505 - 2012-10-24 11:33

      We all wished we saved more money in the past.

  • cherryflava - 2012-10-24 11:22

    Use less of the stuff. Get ride of the 4x4, walk more, cycle sometimes, take the train. The answer isn't in kicking the can down the road, it's a shift in how you see the problem.

  • loodpil.lipdool - 2012-10-24 11:42

    WHAT ??? There's a correlation between the price of fuel and electricity, and, and, inflation ? Quick, somebody should tell the government.

      alan.gernet - 2012-10-24 11:45

      does not affect the Nkandla clan .. so who cares?

  • J.Stephen.Whiteley - 2012-10-24 11:44

    The proper term is Consumer Price Index. Inflation is not a synonym for price increases.

  • annelise.vanderschyff - 2012-10-24 12:01

    Ons land is in sy moer!!!!!!dankie anc!!!!

  • neil.frandsen - 2012-10-24 12:17

    All lies, you walk into a fast food place in January and they would all have put exactly 10% on top of their prices as an increase, the same goes for Spar, Checkers and Pick n pay. 5.5% is a pipe dream, we wish that was the inflation rate. I paid R1,39 for a plain white hamburger roll yesterday from Checkers. The very same roll cost 50c about 5 years ago, if not less. Someone buy these economists a calculator. Petrol price goes up and food goes up immediatly, petrol price goes down and food price stays the same? To top it all I recieved a 2% salary increase in Feb and was told to be greatfull, insulting!

  • neil.kroese - 2012-10-24 13:13

    Petrol also fuels an excuse for retailers to hike prices cash in on festive season shopping frenzy.Happens every year.Theft is what it. How about stripping the petrol price of all it's taxes and levies, and increase VAT to recoup the lost revenue? We need a stable petrol price in a country with no alternative transport but petrol or diesel driven...Increased VAT will also broaden the tax base considerably..As for the poor, increase the 0% VAT basket to include certain staple foods..It is not rocket science people....

  • jacques.shepperson - 2012-10-24 14:49

    lol... what a joke... petrol can only fuel a petrol engine. The question should be why the rand is worth rubbish and why there are so much taxes on fuel?

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