On Friday, I pointed out that burger meal prices in SA are around 40% cheaper than for the same meal in the UK. ETM has been saying the rand is looking undervalued and that we anticipate an accelerating price inflation environment in SA from here. As I wrote on Friday, the much cheaper burger meal prices in SA
“may be an indication that the rand has gotten a little undervalued following the recent bout of weakness. It may also indicate that SA prices are set to ratchet sharply higher from here. Or that we will experience a combination of rand strength and accelerating inflation in coming quarters.”
On Saturday Alec Hogg tweeted that Investec bank charges are nearly 75% cheaper in SA than in the UK.
— Chris Becker (@chrislbecker) July 7, 2013
I again pointed out SA is cheap on a PPP basis. For these prices to equilibrate to some degree, SA prices could rise, UK prices could fall, or the pound could weaken and the rand strengthen (or a combination of all four). Now note Keith McLachlan just tweeted that
So Investec’s monthly banking charge just rose from R295pm to R350pm (+18% y/y), up from R150pm a couple years ago. Ridiculous!
— Keith McLachlan (@keithmclachlan) July 8, 2013
This happens to coincide with my expectation that SA price inflation is set to accelerate at the consumer level. What’s also interesting about it is that the rate that Investec has put its prices up has kept track with the near 18% y/y increase in the JSE All share index. Is SA about to see sharply accelerating price inflation from here?