ANNUAL inflation rose to 7,1% in October, up from 6,7% in September and the highest since February this year.
Commenting on the increase yesterday, PSG Konsult said food prices, which started to pick up momentum last month, were the main driver to the eight-month high.
“The rise in the annual rate [for October] could primarily be attributed to a higher-than-expected rise in food prices and a 1,2% month-on-month jump in transport prices due to higher fuel prices,” PSG Konsult said.
Food prices accelerated a whopping 2,1% on a monthly basis on the back of a strong monthly increase in meat, bread and cereals, fruit and vegetables. Petrol and diesel prices, which account for 2,1% of the transport category, rose by 20 cents and 40 cents during November. This should again push transport inflation slightly higher in November, PSG Konsult said.
“Looking forward, food prices have started its upward momentum in September and should continue to accelerate towards year-end led by higher bread, cereal and meat prices. The drought in the US has resulted in higher feed grain prices which also led to higher meat prices.”
PSG Konsult expects annual inflation to increase to 7,7% in November, before sliding to 7,5% the month after. For 2012, PSG Konsult forecasts average inflation of 6,7%, significantly more than the average rate of 5% for 2011.
It expects annual inflation to breach the 8% level by June next year if food inflation continues its momentum in 2013.