South Africa’s targeted consumer inflation slowed to 6,4% year-on-year in August, in line with expectations, from 6,7% in July, official data showed on Tuesday.
Statistics South Africa said headline CPI stood at 0,3% on a monthly basis in August compared with 1,1% the previous month.
A Reuters poll last week forecast CPI would slow to 6,4% year-on-year and come in at 0,3% on a monthly basis.
Mike Schussler, an economist at Economists.co.za, said the figure was a lot lower than he had expected and brought out the possibility of a rate cut.
”However, people must be a little bit careful, as I think this will be the second-last decline for CPI and inflation could head higher into the new year.
”This number should be good for the bond market, relatively OK for the rand and probably also good for equity markets.”
Freddie Mitchell, an economist at the Efficient Group, said the figure was an improvement over last month.
”It is pleasing to see that food and non-alcoholic beverages are down, and we are seeing food prices showing some signs of easing out.
”We have to look at the economy as a whole and yesterday’s wholesale and retail sales show that consumer expenditure is still under pressure. I don’t
think there is a scope for an interest rate cut today.”
Annabel Bishop, economist at Investec, said the figure confirmed their view that inflation would be within the target range by the end of the year.
”We continue to believe there is almost an equal chance of a decision to cut interest rates by 50bp or leave them flat at today’s MPC meeting. However, if no cut occurs we expect there will then be one in October, as CPI inflation moves below 6%.” – Reuters, I-Net Bridge