Skip to main content

Consumer inflation slows again, after two months of increases

| Economic factors

But with rating downgrades hanging over SA, the Reserve Bank is unlikely to cut rates on Thursday despite the benign inflation environment

Consumer inflation dipped as expected in October, thanks in part to smaller fuel price increases and a continued moderation of food inflation.

The consumer price index (CPI) rose 4.8% in October from a year earlier, after an unrevised 5.1% increase in September.

The Reserve Bank’s monetary policy committee announces its decision on interest rates on Thursday, when it will detail its outlook for inflation over the medium term.

The Bank surprised by not cutting rates at its last meeting in September, and with credit rating downgrades to junk looming for SA — possibly as soon as Friday, when Moody’s and S&P are both expected to announce the results of their reviews — a cut on Thursday is unlikely, even in a benign inflation environment.

CPI inflation has been within the Bank’s 3%-6% target band since April, thanks in large part to tamer food inflation, which has come down steadily since returning to single digits in February, as a severe drought eased in most parts of the country.

The October fuel price increase was also smaller than September’s, Investec economist Kamilla Kaplan noted, at 4c a litre for petrol and 23c a litre for diesel in October — against 29c and 41c respectively in September.

Compared with a month earlier, consumer inflation rose 0.3% in October, slower than the 0.5% month-on-month increase reported in September.

The CPI for goods rose 4.1% in October from a year earlier, and the CPI for services was up 5.5% on the year.

Pin It

Related Articles

By: Shaun Jacobs – Daily Investor Major changes are coming to VAT in South Africa, with the government looking to expand the range of food items exempt from the tax. 
By: Hanno Labuschagne - MyBroadband An anticipated strengthening of the rand and slipping global oil prices could result in lower petrol prices at the pumps next month.
By: Myles Illidge - MyBroadband Eskom has asked the National Energy Regulator of South Africa (Nersa) for a 36.15% electricity tariff hike for the customers it directly supplies and charges, Daily Maverick reports.
By: Yogashen Pillay – The Mercury Economists are predicting a big drop in petrol and diesel prices next month, saying it will bring much-needed relief to under-pressure consumers.
By: Jason Woosey - IOL Petrol and diesel prices are set to come down from Wednesday, June 5, according to a statement released by the Department of Mineral Resources and Energy (DMRE).