Headline inflation is projected at 4.8% in 2022 and 4.4% in 2023, National Treasury said on Wednesday.
This is attributed to food and energy prices, especially municipal rates from rising electricity prices, high domestic food inflation and elevated fuel prices, which are expected to be the key sources of inflationary pressure in 2022.
“Fuel prices were up 40.4% in the year to December 2021 owing to higher global crude oil prices.
“Fuel prices are expected to ease during 2022, but [they] remain elevated and above the 2019 average price level.
“Global supply-demand imbalances triggered an acceleration in the price of raw materials and intermediate inputs, which will continue to put upward pressure on consumer inflation.
“Medium‐term risks to the inflation outlook are to the upside, primarily as a result of price pressures from food and non‐alcoholic beverages, along with petrol, energy and other administered prices.
“Although the forecast assumes 2022 and 2023 electricity prices rise in line with Eskom’s application for a tariff increase in 2022/23, there is a risk that electricity inflation may exceed the assumption due to increasing costs of ensuring electricity supply,” said Treasury in the Budget Review document.
Household consumption expected to grow by 2.5% in 2022.
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