Johannesburg - South Africans may get a little bit more breathing space this month as inflation slowed to 5.9 percent in August.
Wire service Reuters reports that this is its lowest in 9 months, from 6 percent in July, based on data from Statistics South Africa released on Wednesday.
Economists polled by Reuters correctly predicted CPI would come in 5.9 percent, falling below the top end of the central bank's 3 percent to 6 percent target band. The inflation figure followed a drop to 6 percent in July.
The South African Reserve Bank meets on Wednesday and Thursday and announce on Thursday whether it will hike the repo rate. Prime is currently 10.25 percent.
On a month-on-month basis, prices were down 0.1 percent after a 0.8 percent increase previously, Reuters reports.
Core inflation, which excludes the prices of food, non-alcoholic beverages, petrol and energy, was unchanged at 5.7 percent year-on-year, but slowed to 0.2 percent month-on-month from 0.6 percent, the wire service says.
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Paul Sirani, chief market analyst at Xtrade, says “South Africa’s inflation rate is a big talking point, most visibly among students holding protests about their above inflation eight percent tuition fee hike.
“Complicating the picture further, oil prices are on the up and the US Federal Reserve is seriously considering a second interest rate rise in quick succession. It’s likely that this uncertainty is why many observers think inflation will relatively remain static and keep within the Bank’s target of between four and six percent in the short term.
“But there are plenty of unknowns ahead for Finance Minister Pravin Gordhan, not least the dark clouds looming over his own future. An interest rate rise from across the Atlantic and a possible credit downgrade for South Africa are both on the agenda too, so the coming months could be crucial for the economy.”
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