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There was some upward pressure from increased electricity prices, but this was offset by the decline in domestic fuel prices.
There was some upward pressure from increased electricity prices, but this was offset by the decline in domestic fuel prices.

Inflation eases even more than expected


By Sunita Menon - Aug 21st, 10:36

Inflation eased more than expected to 4% in July. 

Measured by the annual change in the consumer price index (CPI), inflation moderated from June’s 4.3% — remaining well within the Reserve Bank’s 3%-6% target band. Economists polled by Bloomberg expected inflation to ease to 4.3%. June’s inflation print was revised down to 4.3% from 4.5%.

While there was some upward pressure from increased electricity prices, following Eskom’s implementation of the Nersa-approved average price increase of 15.63% for municipalities, this was offset by the decline in domestic fuel prices.

The main contributors to the inflation rate were food and nonalcoholic beverages, which contributed 0.6 of a percentage point; housing and utilities, which added 1.2 percentage points; transport, which contributed one percentage point; and miscellaneous goods and services, which added 0.9 of a percentage point.

Electricity was up 10.4 percentage points compared with a year ago while fuel was down 0.5 of a percentage point compared with a year ago and by 5.1 of a percentage point compared with the month before.

The annual change in CPI is the key measure used by the monetary policy committee (MPC) to set interest rates.

At its July meeting, the MPC cut interest rates by 25 basis points, effectively reversing a controversial interest rate hike in November 2018. The Bank cited lower growth and lower inflation expectations for the cut.Business Live 

Read more about: sa economy | inflation | cpi

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