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Consumer inflation rises to its highest level in five years

Inflation in South Africa has exceeded the monetary policy limit of the South Africa Reserve Bank for three consecutive months which saw annual inflation of consumer prices rising to 6.5% in May from 5.9% in April, official figures show.

According to Stats SA, the rate is very high right now, the highest since January 2017.

Just over half of the annual average was driven by transportation, food and non-alcoholic beverages (NAB), both with sharp rise in prices.

If fuel was still a major factor, and removed from the May Consumer Price Index study, the subject rate would drop to 5.1% from 6.5%.

Between April and May, diesel prices increased by 8.1%, bringing the annual rate to almost 45%.

In May 2021, the average diesel price was R16.20 a liter. That means it costs R729 to fill a 45 liter tank.

Twelve months later, filling the same tank costs R1 065, which is R23 67 a liter.

Despite the global economic downturn, oil prices fell between April and May by 0.7%.

In spite of these declines, fuel costs 27% more than they were in May 2021.

Food and non-alcohol prices increased by 2.1% between April and May, reflecting the largest monthly increase since February 2016, when monthly inflation was also 2.1%.

The country was experiencing a severe drought at the time.

The oil and oil production team sees widespread price increases. Annual inflation was 26.9% for 17 consecutive months (from December 2020), for the first time since 1997 when the rate was above 10%.

Sunflower oil currently has about 40% more value than last year, which is the highest value product in the oil and oil industry. Oil prices rose 16.1% between April and May this year.

The monthly rate of bread and grain was 3.4%, with the annual average reaching 8.4%. The price of maize flour increased by 5.1% every month, while white loaf of bread cost 3.7%.

Annual inflation remains at more than 65% since November 2020. The prices of frozen chicken (IQF) portions and stew beef increased by 13.7% and 12.2%, respectively, in the twelve months to May. Source Stats SA.

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