Report by Monika Kristof
Executive summary
- The annual inflation rate for January 2021 stood at (2.7%) up from (2.4%) that was recorded for December 2020.See Figure 1.
- On a monthly basis the monthly inflation rate rose to 0.9% in January 2021 from 0.0 % recorded for the previous month.
- The slight increase in the annual inflation rate between January 2020 and January 2021 emanated mainly from the categories of communications, food and non-alcoholic beverages, alcoholic beverages and tobacco and furnishing, household equipment and routine maintenance of the house. See figure 2
- The category of clothing and footwear and transport recorded a deflation for January 2021.
Analysis
- The annual inflation rate for food and non-alcoholic beverages increased from (2.2%) to (5.2%) this was mainly influenced by high demand for meat and oils and fats.
- The annual inflation rate for communications increased from (0.7%) to (4.1%), this was influenced by the high demand for communication services due to COVID-19 19 restrictions.
- Alcoholic beverages and tobacco annual inflation rate increased from (2.6%) to (5.0%), this was influenced by the high prices reflected in the category of tobacco.
- The annual inflation rate for housing water, electricity, gas and other fuels increased from (-1.2%) to (1.0 %) this was influenced by an increase in the prices of rental payments for dwelling (both owners and renters) and in the electricity, gas and other fuels prices.
- The annual inflation rate for furnishings, household equipment and routine maintenance of the house increased from (2.9%) to (4.1%) this was influenced by the price levels of carpets and other floor coverings, glassware, tableware and household utensils.
- The annual inflation rate for hotels, cafes, and restaurants declined from (4.1%) to (0.1%), this was influenced by the lack of demand for Accommodation services.
- Transport category recorded a depressing decline in the annual inflation rate from (5.0%) to (-0.9%), this was due to the lack of demand for car parts.
- The education category recorded a decrease in the annual inflation rate from (5.7%) to (1.8%) this was influenced by the price levels of pre-primary education (ages 2 to 6 years) and tertiary education.
Outlook
- We project that the annual inflation rate for February 2021 will increase but it will remain within the South Africa inflation target of 3% and 6%.
Figure1: Annual inflation rate
Figure 2: Categorical analysis Year on Year %
