Inflation steady at 4.5% in June
By Karl Gernetzky - Jul 24th, 13:08
Consumer inflation was slightly higher than expected in June, unchanged from May’s 4.5%, but remained at the midpoint of the Reserve Bank’s 3%-6% target range.
Inflation remained unchanged at 4.5% in June compared with May, only a slight disappointment amid the hope that the Reserve Bank will deliver a second interest rate cut in coming months.
Measured by the annual change in the consumer price index (CPI), inflation’s print at 4.5% is at the midpoint of the Reserve Bank’s 3%-6% target band. Economists polled by Bloomberg expected inflation to moderate slightly to 4.4%.
The main contributor to the inflation rate was housing and utilities, costs of which rose 4.9% year on year, adding 1.2 percentage points to the headline figure.
The annual inflation rates for goods and for services were 4.0% and 4.8% respectively.
A stable rand and the expectation that inflation will remain contained has raised the hope that SA will get more interest rate cuts, following the 25 basis point cut in July. While the Reserve Bank said it expected inflation to average 4.4% in 2019, down from 2018’s 4.5%, it did warn of continued local and global risks to the rand.
Economists have pointed to slowing wage growth and a sluggish local economy as reasons there is little inflationary pressure, while lower fuel price pressure had prompted the expectation that inflationary pressure would moderate even further in June.
The price of 95-unleaded petrol rose by 9c/l rise in June, although this was largely due to the implementation of a 7c/l carbon tax.
In July, motorists welcomed a hefty 95c/l drop in the petrol price.Business Live
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