SA consumers forced to tighten belts as CPI rises to 3.2% y/y in March

South Africa's headline consumer price inflation rose to 3.2% year on year in March from 2.9% in February, according to Statistics South Africa. The increase in inflation has put a strain on consumers, forcing them to tighten their belts and make difficult choices in their daily purchases. The main contributors to the inflation rate were food and non-alcoholic beverages, which rose by 5.7%, education at 4.1%, and miscellaneous goods and services, including personal care items and financial services, which increased by 4%. These categories are showing above-average inflation rates for the month. The impact of the rising prices is being felt by South African consumers, as detailed by Grace Rodriguez from Bryanston and Tshepang Mofokeng from Katlehong in a recent interview on CNBC Africa. Grace, a mother of two working as a corporate gifter, highlighted the challenges of increasing prices on her grocery shopping. She mentioned that she had to cut down on many things that were once taken for granted, such as buying more affordable brands due to the rising cost of products like milk. Tshepang, who supports four people and works as a musician, shared her struggles with compromising on food quality and cutting out items like fruit and vegetables due to their high prices. The impact of inflation is evident in the food basket, wherein meat is the second-largest contributor to the overall inflation rate. Meat prices have increased by 6.7%, with items like lamb, beef, and frozen chicken experiencing price hikes. Both Grace and Tshepang noted changes in their meat consumption habits, with Grace mentioning that meat has become a luxury, while Tshepang expressed reliance on affordable protein sources like frozen chicken. The price fluctuation in different types of bread, like white and brown bread, was also discussed, with insights from Patrick Kelly, Chief Director at Statistics South Africa. Kelly explained that price movements in bread types may vary due to promotional strategies and pricing differences among brands and outlets. Additionally, the impact of inflation on sectors like sugar, sweets, and desserts was explored, with Grace and Tshepang sharing their experiences of reducing consumption in such categories. The conversation extended to the income challenges faced by Grace and Tshepang in light of their respective professions. While Grace mentioned gratitude for a steady job despite stagnant salaries, Tshepang highlighted the severe financial strain on the music industry due to pandemic-related closures, leading her to borrow money and move back in with her parents to survive. Looking ahead, Kelly refrained from making specific inflation forecasts but highlighted the presence of significant items like housing and medical aid with potentially varying price trends in the coming months. He also noted the potential impact of rising oil and petrol prices on overall inflation, signaling a need for consumers to remain vigilant in managing their expenses. Despite the challenges posed by the recent inflation uptick, RMB Chief Economist Etienne LaRue expressed a cautious optimism, suggesting that while inflation has increased, there is little reason for alarm.