October inflation surprises with jump to 7.6%

• October inflation surprised, picking up to 7.6% when economists expected it to ease.
• The main drivers of inflation were food, transport and household prices.
• Bread, cereals, meat and dairy are the key products impacting food inflation.
• For more financial news, go to the News24 Business front page.

October inflation picked up to 7.6%, from 7.5% recorded in the previous month. 

Economists had expected inflation to ease to 7.4%.

Stats SA released the figures on Wednesday, which show a 0.4% month-on-month increase in October. 

The main contributors to inflation were food and nonalcoholic beverages, which increased 12% on a year-on-year basis and transport, which was up 17.1%.

Housing and utility prices were up 4.3% on a year-on-year basis, and also contributed to the increase.

Breads, cereals, meat and dairy are the key product groups which drove food inflation, explained Patrick Kelly, chief director for price statistics.

"The bread and cereals category continues to see high levels of inflation with the annual rate increasing to 19.5%, compared to 19.3% last month," Kelly said.

Large monthly price increases were recorded for sweet biscuits, macaroni, and maize meal - Stats SA highlighted.

Annual meat inflation rose to 10.5% from 9.9% in September and milk, eggs and cheese prices saw an increase of 10.5% - the highest rate since February 2017, Kelly said.

Hot beverage prices increased by 14% - also the highest annual reading since February 2017.

The oil and fat products category, which drove food inflation higher for many months, had recorded its second consecutive month of disinflation. Prices fell by 1% after a 6.1% decrease in September.

Transport inflation was driven by vehicle prices - which climbed to 6.1% from 5.8% in September. This is mainly due to higher used vehicle prices - which are, on average, 14.5% more expensive than they were a year ago, Kelly said.

Lower petrol prices have seen fuel inflation decline for a third consecutive month.

As for household utilities - detergents such as washing powder and dishwashing liquids and health insurance premiums all reflected increases.

Economists expect the Reserve Bank to hike interest rates by 75 basis points at its next meeting on Thursday - given risks around the inflation outlook and a "softer" rand exchange rate, the Bureau for Economic Research said in its weekly overview.