Hopes of rate cut in SA

JOHANNESBURG – The increase in South Africa’s consumer price index (CPI), which is used by the South African Reserve Bank (SARB) for its inflation target, was up 6,4 per cent year-on-year (y/y) in August from 6,7 per cent y/y in July, Statistics South Africa (Stats SA) said yesterday.

CPI was up 0,3 per cent month-on-month (m/m) after increasing 1,1 per cent in July.Consumer inflation was expected to have receded to 6,4 per cent y/y in August, according to a survey of leading economists by I-Net Bridge. Forecasts among the economists surveyed ranged from 6,3 per cent to 6,7 per cent.Mike Schüssler, economist at Economists.co.za, said: ‘This is a lot lower than I expected and certainly sets the cat among the pigeons and does bring out the possibility of an interest rate cut today.’However, people must be a little bit careful, as I think this will be the second-last decline for CPI and inflation could head higher into the new year.Efficient Group economist Freddie Mitchell said: ‘It was on market consensus and better than last month. It is pleasing to see that food and non-alcoholic beverages are down, and we are seeing food prices showing some signs of easing out.’We have to look at the economy as a whole and yesterday’s wholesale and retail sales show that consumer expenditure is still under pressure. I don’t think there is a scope for an interest rate cut today.’- I-Net Bridge