The headline Consumer Price Index (CPI) inflation lifted slightly in May to 5.4 percent from 5.3 percent year-on-year in April on food and petrol prices, Statistics South Africa said on Wednesday.
Figures released on Wednesday, showed that South African food and non-alcoholic beverages price inflation rose to seven percent year-on-year in May from 6.6 percent year-on-year in April, but the broader disinflation profile remained a feature.
On average, prices increased by 0.3 percent between April and May, in line with market expectations.
The uptick in food inflation was largely driven by meat, given the ongoing cattle herd restocking process resulting from the recent drought.
Stats South Africa said the meat price inflation rose to 12.3 percent year-on-year from 10.6 percent year-on-year in April.
But the Agricultural Business Chamber (Agbiz) said the normalising beef supply and improving poultry supply was signalling that meat price inflation will be contained going forward.
Agbiz economist, Wandile Sihlobo, said last month’s slight uptick in South Africa’s food inflation mirrored the tail-end effects of the 2015-16 El Niño induced drought in the livestock sector.
“As farmers continued to restock their herds, the slaughtering activity eased a bit with that resulting in the increase in meat prices. However, the expected recovery in the poultry sector could soften the pace of an increase in overall meat inflation over the coming months,” Sihlobo said.
“Encouragingly, the most recent weather updates suggest that the fears of another the El Niño weather phenomenon have eased. This suggests that the winter wheat growing areas of the country could potentially have a normal season.”
Also influencing the May CPI outcome was the higher contribution from the transport component, on the petrol and diesel price hikes of 49 cents per litre and 30 cents per litre, respectively.
Petrol price pressures are however expected to abate in the coming months in view of the 25 cents per litre and 23 cents per litre petrol and diesel price cuts in June.
For July, the Department of Energy is currently estimating a substantial decrease in the petrol price of 65 cents per litre.