Higher fuel prices behind March’s rise in inflation
15 Jul, 2022

Momentum Investments have released their research note titled, higher fuel prices behind March’s rise in inflation, prepared by the Momentum Macro Research Team.

Please see below, a summary of highlights from the team, as well as a downloadable PDF of the research paper.


Headline inflation inched higher to 5.9% in March 2022, from 5.7% in February 2022. The figure came in slightly below the Reuters consensus estimate of 6% but met the Bloomberg consensus forecast of 5.9%.
The monthly 1% rise in headline inflation was predominantly underpinned by an increase in fuel prices.
Russia’s further invasion of Ukraine drove international oil prices higher in April 2022. The monthly Oil Market Report for April 2022 by the Organisation for the Petroleum Exporting Countries (OPEC) shows a downward adjustment in global oil demand for the year amid severe new lockdown measures in China. The release of emergency reserves also aided a tight oil market. Nonetheless, the Organisation for Economic Co-operation and Development (OECD) countries insisted that no supply shortages exist and they have agreed to a modest monthly output increment for May 2022.
Higher fuel and fertiliser costs pose a threat to local food inflation in the coming months at a retail level. Although the recent flooding in KwaZulu-Natal has raised concerns over food security, agricultural experts suggest this can be avoided if government finds alternative routes to the Port of Durban.
Although the gap with goods inflation remained sizeable at 5.3%, services inflation ticked higher to 3.4% on the back of rising housing costs. Measures of underlying inflation, including core inflation, the median rate of inflation and the trimmed mean, remain well within the 3% to 6% inflation target band but edged higher in March 2022.
Higher international oil prices and an accelerated hiking cycle globally are likely to support a further normalisation in local interest rates to curb a further rise in inflation expectations. We continue to expect an interest rate increase of 25 basis points at the May 2022 interest rate-setting meeting.

To download the full research paper, click below:



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