JOHANNESBURG – Low inflation is set to benefit consumers this festive season as the South African Reserve Bank (Sarb) looks set to leave interest rates unchanged at its final meeting for the year tomorrow.
Statistics South Africa will today release the Consumer Price Index (CPI) for October, which is expected to have cooled at 4 percent year-on-year.
Inflation was 4.1 percent year-on-year in September, from 4.3 percent in August, dipping below the 4.5 percent midpoint of the Sarb’s target range of 3 to 6 percent.
Economists say the Sarb’s Monetary Policy Committee (MPC) is likely to cut the repurchase rate (repo rate), or at least leave it unchanged, as inflation has consistently surprised on the downside this year. Sarb cut the repo rate by 25 basis points in July, from 6.75 percent to 6.5 percent, and decided to keep it unchanged in September.
But that has not spurred economic growth, as retail sales continue to depict a muted demand environment, moderating to 1.1 percent in August and falling below the market consensus of 1.7 percent.