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BL Premium reports that consumer inflation was steady in October ahead of the SA Reserve Bank’s upcoming decision on interest rates.
Driven by food and transport prices, annual consumer inflation came in at 5% in October, unchanged from September, according to data from Stats SA on Wednesday. With October having remained within the Bank’s target range, expectations are more or less evenly split about whether the Bank will institute a 25 basis points hike, lifting the policy rate to 3.75%. The Bank must weigh up the need to continue to support the economy at the same time that global inflationary pressures have been less transitory than first believed, as rising energy costs and supply chain bottlenecks put pressure on prices. According to Stats SA, the transport index jumped 10.9% in October compared with the same month in 2020, due to higher fuel prices that increased 23.1%. Fuel is likely to be a feature in November’s data as well, after SA saw a spike in fuel costs that pushed the price of a litre of petrol to record highs. Absa senior economist Miyelani Maluleke commented that although inflation remained “broadly contained”, the direct effect of the recent surge in oil prices will have “a marked effect on headline CPI in the coming months”. But some of this would be offset by further easing in food and nonalcoholic beverage inflation, which could see consumer inflation peaking at 5.5% in December.
- Read the full original of the report in the above regard by Lynley Donnelly at BusinessLive (subscriber access only)
- Read too, SA inflation unchanged before key rate decision, at Moneyweb
Get other news reports at the SA Labour News home page