After two years of blockade restrictions, the war in Ukraine and the return of a higher inflationary environment, the chickens appear to have returned home, Absa analysts say.
Citing consumer spending data, the bank noted that economic pressure on consumers appears to be increasing.
“Further pressure in terms of rising fuel prices and consequent increased cost pressure in supply chains certainly paints a grim picture of consumer health and the economic outlook for South Africa,” the bank said.
Absa said South Africa’s recovery from the impact of the lockdowns looks like it could be difficult for most consumers, especially due to the combined effect of interest rate hikes and rising fuel and energy prices. .
This was echoed by FNB economists who noted that South Africa’s inflation rate is set to surpass the 6% level in May. home inflation data and food and gasoline prices continue to rise. , he said.
CPI data released by Stats SA on Wednesday (May 18) returned unchanged at 5.9%. However, this is still at the upper end of the range set by the Reserve Bank, with the same central bank expecting to hit 6.2% in May.
“At present, the outbreak of the rand has led to the under-recovery since the beginning of the month in the price of gasoline to more than R2 per liter, and this would add to the forfeiture of the general exemption from the R1.50 fuel tax. Oil prices may also gain support from a better demand perspective as China eases blockade restrictions.
“The government could provide additional support to cushion consumers from rising gasoline prices, but for now, headline inflation is expected to average 6.4% in the second quarter,” Absa said.
The bank noted that rising food and fuel prices are expected to have a spillover effect on wages and social demand as households try to be compensated for the rising cost of living.
Mineral Resources and Energy Gwede Mantashe already has indicated The government is unlikely to give motorists further relief in June.
In April, Mantashe and Finance Minister Enoch Godongwana announced a temporary reduction of the general fuel tax by R1.50 per liter for April and May.
The decision not to extend the concession would mean that motorists are faced with a scenario of paying up to 3.70 rupees per liter more in June, with the latest under-recovery in gasoline prices recorded at around 2. 25 rupees per liter.