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Inflation rate falls further to 6 per cent

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MBABANE – Despite increases in the prices of food, housing, water and electricity, the inflation rate for the country fell to six per cent.

Since international crude oil prices, the main catalyst of high transport and food prices experienced recently, started falling in August last year, prices of various goods and services started taking a dip as well. According to the Central Statistical Office news for August 2009, the headline inflation rate, which is the annual percentage change in the consumer price index (CPI) during the month compared with that of August 2008, for the country was 6.0 per cent.

“This annual rate of inflation is 0.31 index points lower than the corresponding annual rate of 6.31 per cent observed in July 2009,” it says.


The monthly inflation rate percentage change in the consumer price index (CPI) in August compared with that of the previous month was 1.64 per cent. The report attributes the lower headline inflation to decreases in the annual rates for various goods and services in the basket that were recorded during the month under review.

“The rate of change for restaurant and hotels decreased from 13.13 per cent in July to 12.98 per cent in August; alcohol beverages and tobacco dropped from 10.86 per cent to 8.86 per cent while the rates of recreation and culture decreased from 2.76 per cent in July to 2.49 per cent in August 2009,” the report reads. However, the decreasing rate of inflation was slightly counteracted by increasing rates of growth in prices indices for the remaining goods and services in the basket.

“The rate of change for food increased from 9.20 per cent in July to 9.45 per cent in August; housing, water, electricity, gas and other fuels increased from 2.87 per cent to 9.99 per cent while miscellaneous goods and services increased from 2.52 per cent in July to 2.94 per cent during the month under review,” it says. South Africa’s Reserve Bank (SARB) is expected to announce changes, if any, on interest rates today. However, with interest rates having been cut several times this year, economists are optimistic that inflation was going to decrease further.

“This will also be dependent on international crude oil prices but generally the instrument of interest rate cuts is beginning to yield the expected result of curbing inflation. The main drivers of inflation, fuel and transport prices have been on low levels since late last year and this is what has led to decreasing inflation rate. A fall in inflation rate means increased buying power for consumers,” the independent economist, who preferred to remain anonymous, said.

He said they hoped the Central Bank would cut interest rates at least one more time in the coming months to prevent the effects of possible and anticipated increases in crude oil prices.

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