The Citizen reports that with SA having recorded a big decrease in the consumer inflation rate, the Monetary Policy Committee (MPC) of the SA Reserve Bank (SARB) will sit on Thursday to decide on interest rates.
The inflation rate decreased by almost one percentage point in June to 5.4%, from 6.3% in May. It is at its lowest level since October 2021, and below the upper limit of SARB’s target range of between 3 and 6%. Economist Arthur Kamp of Sanlam Investments believes the MPC will leave the repo rate unchanged now that inflation is slowing down. But, he thinks the MPC will take note of the further increase in inflation expectations reported in the Bureau for Economic Research’s (BER’s) Survey of Inflation Expectations for the second quarter of 2023. Specifically, inflation expectations of trade unions remained elevated at 6.6% for 2023 and 6.2% for 2024, while households also have high inflation expectations at 8.1% for the year ahead. So there are limited signs of a damaging wage-price spiral developing. The Nedbank Group Economic Unit commented that Wednesday’s inflation outcomes were encouraging and it expects inflation to remain below 6% for the rest of the year, ending the year at around 5% with the downward trend mainly come from fuel and food prices.
- Read the full original of the report in the above regard by Ina Opperman at The Citizen
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