INDUSTRY NEWS
inflation item was the transport subindex, which contributes 1% point to the overall CPI inflation rate and showing inflation of 5.5%. “Keeping this overall index below overall CPI inflation is slow vehicle price inflation, but its fuel cost component is the troublesome one, caused by a significant year-on-year fuel price increase of 12.4% year-on-year. Its public transport sub-index was also showing a high 15.5% inflation rate, arguably caused largely by rising fuel costs. Image By Jason Alden, One Red Eye
HIGHER INFLATION AFFECTS POOR CONSUMERS The Consumer Price Index (CPI) inflation rate for December which was released last month, shows a slight increase from 5.6% to 5.7% year-on-year, providing the latest insights as to where the household sector is most or least pressured by price increases. First National Bank’s Household and Consumer Sector Strategist, John Loos, said the rise was due to an increase in year-on-year petrol price inflation. Loos said the key area to watch now was the residential rental market for signs of strengthening, which could drive CPI inflation higher due to its heavy weight. “Recently, we have seen the rental inflation rates rising slightly in the index, although still very much subdued. Along with this in mind, food price inflation is a key, and of concern has been the recent double-digit price inflation in the Producer Price Index for the agricultural products. This suggests that the impact of the recent global food price surge, as the result of the United States drought conditions, may not yet be over.” Loos went on to say that the third major item to watch was oil and petrol prices. “Here, signs are more encouraging perhaps, and one would expect to see slowing year-on-year petrol price rise as high base effects from prior oil price surges looks to be taking some effect, slowing the year-on-year oil Rand oil price inflation in recent months.” Loos said the other “big ticket”
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upheaval is not insignificant, judging by the late 2012 widespread strike actions. Meanwhile the Reserve Bank’s Monetary Policy Committee (MPC) has decided to keep the repurchase rate unchanged at 5.0% per annum. However, Reserve Bank governor, Gill Marcus, said the MPC will monitor developments closely and will not hesitate to act in a manner consistent with its mandate.
In her statement, Marcus said food prices, exchange rate and wage settlements continue to pose a “Another major sub-index with significant near-term risk to the inflation problematic elements is the Housing outlook. She said the MPC would CPI which, although only showing 6% continue to assess the balance of risks to inflation, possesses the electricity subthe inflation outlook to be on the upside. component which showed 10.3% inflation “The MPC remains concerned about the as Eskom continues to ratchet up the possibility of a wage-price spiral and its tariffs, while the water and other services potential to exacerbate the high level component including municipal rates were of unemployment. We need cohesion of not far behind at 9.1% inflation. A final policy and decision making to provide sub-index that deserves mention for the the necessary certainty for sustainable wrong reasons is that of education, which economic growth and development.” shows an inflation rate of 9%.” Marcus expressed concerns over the Loos said that examining the key country’s domestic economic growth, components of CPI inflation, food saying it remains “fragile and below and non-alcoholic beverages inflation potential”. This followed an annual remains the most troublesome growth rate of 1.2% in the third quarter component of the CPI, contributing 1.1% of 2012, and a forecasted growth point to the overall inflation rate. This rate of around 2.5% for this year. The is of particular concern at the current International Monetary Fund also revised time due to food prices exerting greater down its 2013 growth forecast for South financial pressure on the lower income Africa to 2.8%, from a previous 3% groups, at a time when the risk of social estimate in October.
STRIKE IS UNLIKELY TO AFFECT WINE PRODUCTION
Birch says exports for 2012 reached a whopping 417 million litres — 10 million litres more than the previous record of 407 million achieved in 2008, and a 17% increase on volumes from 2011.
“The record levels are the result of a more favourable currency, as well as shortage Despite wildcat strikes and labour of wines, stemming from a significant protests that ensued in the farming sector drop in the recent harvests of competitor in the Western Cape over the past few wine-producing nations in Europe, Latin months, the South African Wine Industry America, Australia and New Zealand.” remains optimistic that 2013 can still be one of the best harvest years ever. SA Wine Industry & Information Systems anticipated that the 2013 wine grape Chief Executive of Wine of South Africa crop should amount to a total of 1 384 (WOSA), Su Birch, says all indications are 357 tons. Birch said that while bulk that this year’s local crop could be the exports accounted for 59% of volumes third largest in recorded history. in 2012, this was in line with a global growing trend. “This is assuming that good weather conditions continue and that there is a She said while packaged wines speedy and peaceful resolution to the generally offered higher returns, farm workers strikes and harvests come local producers have been forced to in on time. The anticipated crop size is, compete globally by providing what the despite a decrease in total plantings, mainstream markets want. thanks to one of the best winter seasons in the Western Cape for many years.” “Obviously we would prefer the accent to
