‘SARB unlikely to hike interest rates despite increased inflation’

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Chief Economist at Investec, Annabel Bishop, says while the rise in inflation may be a concern for the South African Reserve Bank (SARB), it is unlikely to hike interest rates when it makes its rate announcement tomorrow.

Her comments come after data released by Statistics South Africa showed that the annual consumer price inflation increased for the third consecutive month from 5,4% in September to 5,9% in October.

Bishop says higher food and fuel prices were the main drivers of inflation in October.

“The key drivers were fuel, transport costs and food prices. Looking forward, CPI inflation is not expected to see another large print next month as fuel prices fell in the month of November, which should provide some moderation in the CPI inflation outlook.”

Bishop adds: “However, the MPC [Monetary Policy Committee] meets tomorrow and of course, this elevated inflation figure will concern the Reserve Bank. Its inflation forecasts are more elevated than those in the markets for 2024. So it should not necessarily change its outlook. But the South African Reserve Bank is likely to remain more hawkish, and while the risk of an interest rate hike remains for tomorrow it is not widely expected,” adds Bishop.

VIDEO | SA’s latest inflation figures out today ahead of SARB announcement on the repo rate: