Economists warn of inflation ripple effects as April CPI hits 4%

Added: 2026-05-20

[00:00:00]Housing and utilities remain the single biggest contributor to overall inflation, adding 1.2 percentage points to the 4% headline rate. Increases in electricity, municipal rates, and other utilities tariffs fueled higher administered price pressures. Transport inflation rose to 4.9% in April as petrol increased by more than 3 rands per liter and diesel by over 7 rands per liter at the beginning of the month.

[00:00:25]Stats SA notes that this fuel shock has already filtered through to air fares and taxi fares.

[00:00:31]Consumers were dealt a painful fuel price blow in April. The index for fuel rose by 18.2% from March, the steepest monthly increase since the current CPI series began in 2008.

[00:00:46]Petrol prices were up by 15.2% and diesel by 35.4% The price for inland 93 octane petrol rose to 23 rand 25 cents a liter in April. The fifth largest increase for this grade in 50 years and the largest this century.

[00:01:06]Motorists using diesel felt the most pain. The average price for a liter of diesel jumped from 21 rand 28 cents in March to 28 rand 80.

[00:01:16]The passenger transport index climbed by 3.1% between March and April. Senior economist at Standard Bank Elna Moolman says the Reserve Bank may hike interest rates in the coming months. Reserve Bank is naturally concerned that the sharp increase that we're seeing in fuel costs will ultimately cause a broadening of inflation pressure or the so-called second-round inflation pressure. It is too soon to assess it in this data set, however, because these pressures take time to develop. We have seen in this data set that transportation costs have increased significantly. This ranges from air fares to taxi fares to long-distance bus fares to e-hailing services.

[00:01:59]The Reserve Bank may, unfortunately, hike interest rates to ensure that this increase that is underway in inflation will not lead to secondary inflation pressure.

[00:02:12]On the bright side, food inflation was lower in April, its lowest level in 14 months, according to the Agricultural Business Chamber. Ample domestic and global supplies of grains, fruits, and vegetables, softer vegetable prices, and continued cattle slaughter kept food inflation at bay. This is all because of the large domestic agricultural production. If you look at how much fruit we have produced this year, the grain production, all of these are the key contributing factors to this lower pace of food prices in South Africa. And of course, the base effect on the meat side because in the livestock and pork producers industry, we still have some challenges. We continue to struggle with the foot and mouth disease in the cattle industry, as well as the avian influenza in the pork industry. But of course, when we have some of these diseases, one of the difficulties is that we can't access export markets. That puts pressure on the producers, but for the consumer side, it also means that although slaughtering may decline, but there gets to be some decent supplies of the product for the local market. Core inflation, which strips out food, non-alcoholic beverages, fuel, and energy, climbed to its highest level since December 2024 at 3.6%.

[00:03:34]Independent economist John Loos cautions that higher inflation, combined with the risk of further fuel price hikes, will erode real disposable incomes and slow household consumption growth, particularly for big-ticket items and discretionary spending such as durable goods and holidays. Diabo Seto, SABC News, Johannesburg.