(Serhii Hryshchyshen/Getty)
Consumer inflation has dipped below the SA Reserve Bank’s key target of 4.5%, cooling to 4.4% in August from 4.6% in July.
This should seal the deal for an interest rate cut on Thursday.
Over the past seven years, the monetary policy committee (MPC) has emphasised that it would like to see inflation close to the 4.5% midpoint of its 3% to 6% target range. It has been adamant that local rates won’t be lowered before inflation is anchored around this level.
Economists expect a 25 basis-point cut following a meeting of the MPC on Thursday. Another cut of the same size is expected in November.
Consumer Price Index. Source: Statistics SA
August’s inflation print is also below the median expectation (4.5%) of 19 economists polled by Bloomberg.
August’s inflation number is also the lowest since April 2021, thanks in great part to lower transport prices following a series of fuel price cuts.
Diesel and petrol prices are now at the lowest level since February 2023 – and more relief is on its way.
Fuel prices should fall even further at the start of October, with the latest estimate from the Central Energy Fund pointing to a R1.23/litre cut in the price of 95 unleaded petrol and a more than R1.10 fall in wholesale diesel prices. This could push fuel prices to levels last seen before Russia invaded Ukraine in February 2022.
Cooler housing and restaurant prices also helped August’s consumer number.
However, food and drink prices edged higher, Statistics SA reported.
After cooling over the past eight months, prices of food and non-alcoholic beverages rose to 4.7% from 4.5% in July.
While fruit, sugar, sweet and dessert prices fell, the rest of the categories saw hotter inflation.
Instant coffee was 22% more expensive than a year ago and is now at a 19-month high. Egg prices are also much higher than a year ago.
Source: Statistics SA
In a single month, the price of peppers jumped almost 14%, while sweet potatoes were 9% more expensive.
Source: Statistics SA
While meat prices were still more expensive than a year, prices dipped from July to August.
Statistics SA reports that prices for fresh whole chickens fell by more than 2%, followed by sausages (down 1.7%) and beef mince (down 1.3%).