Phone and power bills hit inflation

Robert Laing

Robert Laing

Telkom's annual tariff increase along with more municipalities implementing Eskom's electricity price hike outweighed August's 30c a litre petrol price dip to push inflation above expectations.

Statistics South Africa measured August's consumer price index excluding mortgages (CPIX) at 13,6percent, exceeding the 13,3percent economists predicted.

Coffee and smoke breaks got a lot more expensive in August.

Sugar showed the biggest month-on-month price increase of 4,6percent, followed by coffee, tea and cocoa which went up 4,4percent from July.

Cigarettes showed the fourth biggest monthly price jump at 3,5percent behind fuel and power at 4,2percent.

Economists had warned that July's 23percent month-on-month spike in fuel and power did not reflect the full inflationary impact of Eskom's annual price increase because households would only see it on their bills from their municipalities' year-end month.

Electricity will hit September's inflation data again as municipalities implement the electricity tariff increase granted to Eskom by the National Electricity Regulator ahead of the October deadline.

The consensus among economists is August's 13,6percent will be the CPIX peak and September's data will finally show a drop for first time since August last year when inflation fell to 6,3percent from July's 6,5percent.

But Standard Bank economist Danelee van Dyk is pessimistic: "CPIX inflation is expected to deteriorate, with the peak expected around 14percent in September, depending on the extent of further electricity tariff increases."

Stats SA calculated that Telkom's annual price increase caused the average telephone bill to get 3,1percent more expensive.

Hopes of inflation dropping to a level which will prompt the Reserve Bank to lower interest rates next year rest on oil getting cheaper. Van Dyk said: "In September, the fuel price dropped by 7,1percent month-on-month, which will translate to approximately 0,5percentage points' relief on the inflation front. At this juncture October could see a further 30 cent cut in the petrol price, which takes us one step closer to a lower inflation profile by year end."