'Worst on inflation front not over yet'

Siya Miti

Siya Miti

Retailers fear the worst is not over on the inflation front despite Statistics SA's September CPIX inflation index dropping to 13 percent from 13,6 percent the previous month.

The manager of Saveways in the Eastern Cape town of Alice, Gray Shenon, said he did not believe that inflation would stabilise while the financial crisis in the developed world continued.

"I think we are still probably awaiting a bit of a rise. I don't think it has peaked yet, especially with the rand to the dollar exchange rate so high.

"Basics like (cooking) oil and rice are imported and they have come down in the last two months or so. But with the (weak rand-dollar) exchange rate, we might see an increase by January," said Shenon.

East London-based Norman's Deli manager Navin Nadhoo said if the financial crisis in developed markets persisted, it could reverse the marginal drop in food prices.

"The financial crisis is affecting all of us. Inflation was already high and people are not buying much anymore as they try to save. The depreciation of the rand is going to push up prices again," said Nadhoo.

Econometrix senior economist Tony Twine agreed with the retailers and said if the rand did not get a boost by 2009, prices would go up again.

"The latest indicators are that the bite might have gone out of food inflation for now because oil prices and food inflation from the PPI continue to pull inflation down.

"General retail inflation, which is not part of the CPI, shows that retailers are running three percent ahead of CPI. Retailers are more sensitive to inflation than mere mortal economists," said Twine.