The inflation outlook for next year has improved significantly, SA Reserve Bank governor Tito Mboweni said on Tuesday.
He said the CPIX measure of inflation (the consumer price index excluding mortgage rates) was expected to peak in the fourth quarter of this year and would ”slow down quite rapidly” during next year.
”The bank’s projections indicate that CPIX inflation will decline below six percent… by the second half of 2003,” he told the National Press Club in Pretoria. He would not say whether this would prevent another interest rate hike later this year.
Mboweni said the Reserve Bank would stick to its policy of inflation targeting. ”We are standing our ground very firmly to achieve our
objectives.” He conceded it was unlikely that this year’s target of between three and six percent would be realised.
The target for next year is also between three and six percent and that for 2004 between three and five percent. A major risk for inflation next year was the current tension around Iraq which Mboweni said could have a significant impact on oil prices. ”If war breaks out in the Middle East most of our assumptions will be thrown into disarray,” Mboweni said. – Sapa