JOHANNESBURG - Data released on Wednesday morning by Statistics South Africa (StatsSA) showed that consumer prices (CPI) in South Africa increased 4.8% year-on-year in August, higher than a 4.6% rise in July which was the lowest inflation rate since September of 2015.
The increase in the CPI was fuelled by transport prices rose faster in August while food cost increased the least since November of 2015.
The South African Reserve Bank (SARB) at the conclusion of its July Monetary Policy Committee (MPC) meeting said that it expected headline inflation to slow to 5.4% in the fourth quarter of this year, although the MPC indicated at the time that the forecast did not adjust for the latest consumer price index print before that meeting.
The central bank at the same meeting cut its benchmark repo rate by 25 basis points (bps), its first rate cut in five years.
However, Stats SA said the annual core inflation which excludes the cost of food, non-alcoholic beverages, petrol, and energy fell to 4.6% in August of 2017 from 4.7% in July, reaching the lowest since August of 2012. On a monthly basis, core inflation eased to 0.1% compared to 0.5% in the previous month.
John Ashbourne, an Africa economist at Capital Economics, on Wednesday said August inflation data supported his view that the central bank will cut its key policy rate from 6.75% to 6.50% at its meeting tomorrow.
“Moderate inflation and looser monetary policy will provide a boost to South Africa’s economy. We expect that growth in the country will exceed expectations in the third quarter and the fourth quarter, with gross domestic product (GDP) growth over 2017 as a whole rising to 1.5%,” Ashbourne said