Advertisement

SA inflation seen moderating to 5.6%

South Africa's inflation is likely to have dropped in June, continuing the previous month's downward trend and cementing it well within the Reserve Bank's 3-6 percent target range, a Reuters poll showed on Friday.

Seventeen economists saw inflation easing to 5.6 percent year-on-year in June compared to 5.7 percent the previous month.

Earlier this month central bank governor Gill Marcus said inflation should remain within the target range on a sustained basis to the end of 2014, with the main upside coming from falls in the rand due to investor risk aversion.

The latest Reuters Econometer survey expects inflation to average 5.72 percent this year and 5.35 percent in 2014.

The central bank has kept the repo rate at 5.5 percent, a three-decade low, since November 2010 to support a sluggish recovery.

It holds its next monetary policy meeting next week.

On a month-on-month basis inflation is forecast to quicken to 0.3 percent in June from 0.1 percent previously because of the inclusion of taxi and other transport fares in this month's calculation, Nedbank economist Isaac Matshego said.

“There have been increases since March when the last survey was done,” Matshego said.

In May, easing food and fuel prices drove inflation lower.

Food inflation dropped sharply to 6.6 percent on an annual basis and was at -0.2 percent month-on-month from flat in April.

Transport costs also declined.

Separately, retail sales for May are expected to jump to 4.8 percent from a subdued 1.0 percent in April.

Growth in sales was forecast to rebound as high as 8.3 percent with a low of 0.3 percent. Some economists said the uptick in retail sales would not be sustainable because of the faltering global growth outlook. - Reuters

SHOW ALL
Advertisement