Consumer inflation slowed down more than markets expectations in November.
Statistics South Africa data shows the annual Consumer Price Index (CPI) was 4.6 % in the month, down from 4.8% in October. Economists say the decline in the CPI was due to a decrease in the fuel inflation rate in November.
The petrol price increase at the beginning of November was less than the increase recorded in at the same period last year. Food price inflation, another key driver of inflation has continued to moderate on the back of the dissipating drought in most parts of the country.
Inflation remains within the Reserve Bank targeted 3 to 6%. However, Nedbank’s Economist Busisiwe Radebe is concerned about the looming threats to inflation outlook. “CPI slowed down to 4.6 % market expected 4.7 % that slowdown was mainly due to transport.”
Economists say another risk is the depreciation of the rand which is expected to be impacted by the outcome of the African National Congress conference. “What is going to happen with the rand we don’t know, the SARB is taking the wait and see approach.”
Given the risks to inflation outlook, economists say the Reserve Bank is expected to keep interest rates unchanged in the coming months.
