Inflation rate increased in May

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The consumer price inflation rate has increased to 4.5% in May, from 4.4% in April 2019.

Statistics South Africa says the main contributors to the increase came from higher prices in food, non-alcoholic beverages, housing and utilities, as well as transport costs.

Analysts say while inflation rose slightly higher than expected, it is still low enough to encourage the South African Reserve Bank to cut interest rates.

An economist at Econometrix, Laura Campbell says,  “We have been expecting that food inflation will increase from its decade long lows seen in recent months due to intensifying droughts in the northwest and regions of the country. From a monetary policy perspective, we’re expecting that the Reserve bank will cut interest rates in the coming months.  At the conclusion of their last meeting, they revised their forecast for inflation for this year and next year downwards, so we could see some interest rate relief in the short term.”