Festive shopping could become a bit costly as consumers in South Africa face rapidly rising prices on the shelves in the final months of this year after Inflation quickened for the second month in a row in September, pushed by rising fuel and food prices.

Statistics South Africa (StatsSA) yesterday said the annual headline inflation rate accelerated to 5.4% in September, up from 4.8% in August, bringing the rate to the same level as June this year.

This was slightly above market forecasts of 5.3% but remained comfortably within the 3%-6% target band of the South African Reserve Bank (SARB).

StatsSA said the main upward pressure came from prices of food and non-alcoholic beverages, with transportation rising to 4.2% from a 0.8% contraction in August.

StatsSA chief director for price statistics Patrick Kelly said the annual fuel inflation jumped from 11.7% contraction in August to 1.5% in September after three consecutive months in negative territory.

Kelly said housing and utilities prices also remained at an elevated 5.5%, in line with the rate in August, primarily due to significant rises in electricity and other fuels tariffs, as well as water costs.

“The fuel index increased for a second consecutive month, rising by 7.6% between August and September. The price of inland 95-octane petrol jumped by R1.71 in September, reaching a 13-month high of R24.54. The transport category – mainly influenced by fuel – exerted strong upward pressure on the monthly inflation rate,” Kelly said.

“After cooling for the past five months, the annual rate for food and non-alcoholic beverages inched higher to 8.1% from 8.0% in August. Meat, fish, oils and fats, fruit and non-alcoholic beverages all registered higher annual rates in September.

“Poultry related products experienced some upward price movements in September as producers started to cull birds in response to the outbreak of avian flu. Examples include fresh whole chicken (up 2.2%), fresh chicken portions (up 2.2%) and non-IQF chicken portions (up 1.9%).”

The annual core inflation, which excludes prices of food, non-alcoholic beverages, fuel and energy, eased to a 13-month low of 4.5% in September, from 4.8% in August.

On a monthly basis, consumer prices rose by 0.6% in September, after a 0.3% increase in August, matching market estimates.

Economists yesterday said inflation would probably rise slightly in the coming months, with upward pressure stemming mainly from higher transport costs, resulting from fuel prices.

The price of Brent crude oil has been rising for the past three months, breaching the $90 per barrel level in September after leading producers, Saudi Arabia and Russia, committed to cutting production by 1 million and 300 000 barrels per day, respectively, until the end of the year.

FNB senior economist Koketso Mano said taking these outcomes into account suggested that headline inflation would lift to 5.6% in October.

Mano said the headline inflation would experience further upward monthly pressure from fuel prices following the more than R1 per litre lift in petrol and near R2 per litre lift in diesel prices.

Furthermore, Mano said the avian flu outbreak that had primarily affected the supply of eggs and would likely spill over to chicken should keep food inflation elevated.

“Unfortunately, an undervalued rand should continue to be a source of upward pressure to broader imported inflation. While headline disinflation should be volatile given these supply-side forces, the pass through to core inflation should be limited by mounting consumer stress,” Mano said.

“Overall, we anticipate that headline inflation will average around 6.0% this year, before falling towards target more firmly in 2026.”

While inflation is expected to remain within the target range, analysts said the South African Reserve Bank’s (SARB) monetary policy “was already very restrictive“, and the bank will probably leave interest rates unchanged in November and start a mild easing in 2024.

Anchor Capital investment analyst for fixed income, Casey Delport, said the ongoing rand weakness, which weakened to R19/$ yesterday, remained an inflationary risk, as did rising oil prices.

Delport said the SARB’s recent bi-annual Monetary Policy Review highlighted that the upside risks to inflation had strengthened over the past months, heightening uncertainty about a precise path for inflation.

The central bank further noted that the rise in oil prices, dry weather conditions and elevated inflation expectations negatively impacted the inflation outlook.

“As such, the expected rise in CPI in September further cements the view that domestic interest rates will probably remain higher for longer, with a 50/50 chance of a further 25 basis points hike in the last SARB Monetary Policy Committee meeting of the year,” Delport said.