Consumer price inflation for 2020 was the lowest in 16 years and the second lowest in 51 years as demand remained muted on the effects of the Covid-19 lockdowns.

This could give stimulus to the SA Reserve Bank (Sarb) to leave unchanged or cut interest rates when its Monetary Policy Committee wraps up its first meeting of the year tomorrow.

Data from Statistics South Africa (StatsSA) today showed that the average annual inflation rate for 2020 was a muted 3.3 percent, the lower end of the Sarb target band.

StatsSA said this was the lowest annual average rate since 2004 at 1.4 percent and the second lowest since 1969 at 3 percent.

According to the Sarb, one of the reasons for low inflation in 2004 was a firmer rand, which strengthened from R7.56 to the dollar in 2003 to R6.45 in 2004.

StatsSA said annual inflation ended 2020 at 3.1 percent in December, slightly lower than November’s reading of 3.2 percent.

The monthly increase in the CPI was 0.2 percent, up from zero percent in November.

The main contributors to the 3.1 percent annual inflation rate were food and non-alcoholic beverages; housing and utilities; and miscellaneous goods and services.

StatsSA said that three food groups recorded above average annual and monthly price increases in December as meat prices rose by 7.3 percent from a year ago and by 1.2 percent from November.

Prices in the oils and fats category climbed by 10.2 percent over 12 months and by 1.6 percent over one month.

Inflation in sugar, sweets and dessert products recorded an annual rise of 8.4 percent and a monthly rise of 1.1 percent.