Get more Mail & Guardian
Subscribe or Login

Relief for consumers as CPI hits two-year low

Consumers can expect the South African Reserve Bank (SARB) to cut interest rates, the consumer price index (CPI) hitting its lowest levels since 2016. It shows that prices increased by 4% in February in comparison to the previous year. This is down from January’s 4.4%.

“The three main reasons for the benign growth was that the price of food and non-alcoholic beverages experienced a zero increase; housing and utilities, which makes up nearly a quarter of the index, was up only 0.1%; and the fuel price declined by 1.8%,” says Luigi Marinus portfolio manager at PPS Investments.

Marinus added inflation is now below the midpoint of the 3% to 6% target band for the Reserve Bank, which will put pressure on it to cut interest rates later this month. “They will have to keep in mind the influence of the increase in VAT which comes into effect on April 1 and the fact that the current account deficit widened from 2.1% of GDP to 2.9% of GDP.”

The stability seen in the level of the rand which has been significantly stronger than one and two years ago, needs to be considered. “The positive effect of the strong rand on inflation will unravel if relative strength is not maintained.”

The SARB has managed to keep within its mandate to keep inflation at low levels. South Africans will be expecting cuts in interests rates when the opportunity to do so seems evident, says Marinus.

Nedbank expects inflation to increase in the coming months, however it will remain below the SARB’s 6% upper target range for the rest the year. “The April number will be of importance.”as the increased fuel levy and the increase in VAT take effect, upward pressure is also likely to emanate from high oil and food prices towards the middle and end of the year”.

Price increases slowed in February on an annual basis despite an 0.8% increase from January to February.

Subscribe for R500/year

Thanks for enjoying the Mail & Guardian, we’re proud of our 36 year history, throughout which we have delivered to readers the most important, unbiased stories in South Africa. Good journalism costs, though, and right from our very first edition we’ve relied on reader subscriptions to protect our independence.

Digital subscribers get access to all of our award-winning journalism, including premium features, as well as exclusive events, newsletters, webinars and the cryptic crossword. Click here to find out how to join them and get a 57% discount in your first year.

Thulebona Mhlanga
Guest Author

Related stories

WELCOME TO YOUR M&G

If you’re reading this, you clearly have great taste

If you haven’t already, you can subscribe to the Mail & Guardian for less than the cost of a cup of coffee a week, and get more great reads.

Already a subscriber? Sign in here

Advertising

Subscribers only

DA’s egregious sexual harassment case finally begins

The party is accused of protecting a councillor, who’s also implicated in R1.2m graft

The ANC, DA and EFF ‘oblivious’ to climate crisis —...

The Climate Justice Charter Movement has critiqued the manifestos of the main parties contesting the local government elections and found them ‘shallow’

More top stories

Countries bear cross-border responsibility for harmful effects of climate change,...

The UN committee has been accused of ‘turning its back’ on the children who filed a groundbreaking legal complaint with it against five countries

Magashule files notice to have corruption charges dropped

Counsel for the suspended ANC secretary general tells court the former Free State premier falls outside category of who can be charged for corrupt activities

R1.5-billion in funding approved for riot-hit businesses

Agencies emphasise that speed is crucial to rescuing firms affected by July’s unrest

DA’s egregious sexual harassment case finally begins

The party is accused of protecting a councillor, who’s also implicated in R1.2m graft
Advertising

press releases

Loading latest Press Releases…
×