Annual consumer inflation slows to nine-year low
JOHANNESBURG - South Africa’s headline consumer price inflation slowed to 3.6% year-on-year in November, from 3.7% in October, data from Statistics South Africa showed on Wednesday.
The year-on-year CPI reading was the lowest since December 2010, when the rate was 3.5%, the statistics agency said.
On a month-on-month basis, price growth was 0.1%, versus 0.0% in the previous month.
Core inflation, which excludes prices of food, non-alcoholic beverages, petrol and energy, slowed to 3.9% year-on-year in November compared with 4% in October, while on a month-on-month basis was at 0.1%, the same as in the prior month.
According to Kamilla Kaplan, an economist from Investec, the lower rate of inflation was underpinned by a further deceleration in the transport component of the inflation basket, which moved into deflationary territory, with a reading of -0.3% y/y from 0.3% y/y in October. Indeed, petrol and diesel prices decreased by 13 and 14c/litre respectively in November.
"From December however, and into Q1.20, the year-on-year fuel price inflation rate is anticipated to lift on low statistical base effects. However, underlying fuel price inflation should be contained by the expected low international crude oil price, amid weakening global trade and growth prospects. Food price inflation remained in line with October’s reading at 3.5% y/y, adding 0.6% to the headline outcome, on the back of its significant 15.48% weighting in the inflation basket. The food price inflation trajectory should remain relatively muted going forward, provided SA avoids another drought that would materially affect supply conditions," Kaplan said.
"Overall, the outlook for inflation is relatively benign against a backdrop of softening global inflation, weak domestic demand, low exchange rate pass-through and slowing wage growth," Kaplan further said.
BUSINESS REPORT ONLINE / REUTERS