Despite the inflation rate falling to 4.3% in July compared to 5% in June, housing and utility costs, transport, as well as insurance and financial services continue to put pressure on prices.
According to data from Statistics South Africa, inflation in the housing and utilities sector was 5.2%, in transport at 8.9%, and in the insurance and financial services sector at 5.7%. These three categories collectively contributed 3.1 percentage points to the overall inflation rate of 4.3%.
A particular source of pressure in the housing and utility sector was electricity: prices rose by 8.3% year-on-year and 7% month-on-month after higher tariffs were introduced in July. The increase in water supply and other services costs was 6.4% annually, while actual rent increased by 4.1%.
Annabel Bishop, Chief Economist at Investec, noted that housing and utilities exert the greatest price pressure, as the growth is driven by increases in rent, electricity, and water prices, with the annual rise in electricity prices reflected in July.
Dr. Lerato Ntuli, an economist at Anchor Capital, emphasized that the tariff hike for electricity introduced in July became a key factor of pressure in this category, allowing inflation in housing and utilities to remain high despite a slowdown in overall pressure.
Meanwhile, the transport sector continues to grow due to fuel and passenger transport costs, although the overall category weakened compared to June. Data from Statistics South Africa showed that fuel prices rose by 20.6% compared to the previous year, and passenger transport services by 11.8%.
Ntuli added that passenger transport services remain high year-on-year, but in the monthly period, their prices decreased by 0.9% after rising by 8% in June.
Cautious Outlook
The insurance and financial services sector also showed increased growth, increasing by 5.7% over the year. According to Ntuli, the category grew by 1% month-on-month, while financial services expenses rose by 0.7%, offsetting the decrease in insurance costs.