HEADLINE INFLATION TICKS UP TO 4.4%

MBABANE – After remaining flat for two consecutive months, the headline inflation rate has ticked up by 0.3 percentage points from 4.1 to 4.4 per cent in June.

Headline inflation refers to the change in the value of all goods in the basket. The higher the rate means the faster the rate at which the prices of the goods increase at a given period.
Inflation is measured by the consumer price index (CPI), and at low rates, it keeps the economy healthy. But when the rate of inflation rises rapidly, it can result in lower purchasing power, higher interest rates, slower economic growth and other negative economic effects. According to the latest CPI report issued by the Central Statistical Office (CSO) on Monday, inflationary pressures came from the price indices for alcoholic beverages, tobacco and narcotics, which increased from 0.0 per cent in May 2024 to 1.9 per cent in June 2024, where wine and tobacco products contributed to the higher index.

Increased

The index for recreation and culture increased from 0.4 per cent in May 2024 to 1.7 per cent in June 2024, where price increases were observed in musical instruments and photographic equipment. Transport increased from -0.6 per cent in May 2024 to 0.6 per cent in June 2024, to where price increases were mainly observed in other services with respect to transport equipment. Moreover, prices for food and non-alcoholic beverages persisted on a downward trajectory, declining from 15.4 per cent in June 2023 to 4.1 per cent in June 2024.

This was reportedly due to bread and cereals (which recorded a slower growth); fish and seafood and vegetables (which both recorded negative growths) in this category, while the price index for increased from 3.6 per cent in June 2023 to 13.6 per cent in June 2024. This was due to price increases observed in other services; hairdressing salons and personal grooming in this category. In an interview with this publication, Economist Sanele Sibiya stated that the increase in headline inflation was expected to go up following a number of changes in the economic space.

Regulated

He said these developments included the kicking in of hikes in some regulated commodities which included electricity. The hikes for electricity commenced from April 1, 2024, hence the effect on inflation was starting to be felt. The economist added that the cost-of-living adjustment (CoLa) for civil servants also contributed to the hike in the inflation rate, as this meant that people would have more money in their pockets, hence their ability to go and buy also increased. He said, therefore, to control the fast depletion of items on the shelves because more people have money, retailers would hike prices.

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