Rise in electricity tariff could spike inflation, says Reserve Bank
By Paul Vecchiatto - Mar 14th, 09:08
SA’s electricity tariff increases could push the inflation rate up by 0.75 percentage point, Reserve Bank deputy governor Kuben Naidoo said.
The nation’s energy regulator said last week that Eskom would be allowed to raise electricity prices 9.4% from April 1, taking the total increase to 13.8%. That’s almost 50% more than the assumption the central bank used in its latest projections for 2019, which forecast that inflation would stay below 5% in 2018.
The Reserve Bank assumed a power-price increase of 9.7% for 2018 its in January forecast, which sees inflation accelerating to 4.8% by the end of 2019. The total adjustment that was granted to Eskom could add about 0.3 percentage point the rate, Naidoo said at a conference in Cape Town.
The Reserve Bank increased its key interest rate for the first time in more than two years in November, even as the economy had just come through a recession and hasn’t expanded at more than 2% annually since 2013. It kept borrowing costs on hold in January and trimmed its projection for policy tightening as it lowered its inflation forecast.
While the central bank doesn’t position itself as being in a hiking or softening cycle, “it is no secret that the US is now in a softer interest-rate cycle and this will lessen pressure on the rand,” Naidoo said.
Inflation slowed to a 10-month low of 4% in January.
Business counts cost as Eskom battles power shortages
20/03/2019 - 09:14
State utility Eskom will make more power cuts this week as it struggles with capacity shortages that threaten to stymie President Cyril Ramaphosa’s efforts to boost investments and economic growth.
SA meat price inflation to remain subdued due to foot-and-mouth outbreak
19/03/2019 - 11:27
SA’s meat price inflation could remain subdued in 2019 as a ban in exports could increase local supplies, according to the Agriculture Business Chamber (Agbiz), an organisation that represents commercial farmers and agribusiness.
Manufacturing growth far lower than expected
14/03/2019 - 15:46
The manufacturing sector saw tepid growth at the start of 2019.
SA business confidence falls to almost two-year low
13/03/2019 - 12:29
South African business confidence fell to the lowest level in almost two years in the first quarter, with more than two-thirds of respondents dissatisfied with current conditions.
Better than expected current-account deficit surprises analysts
13/03/2019 - 09:04
SA’s current-account deficit narrowed more than expected on a wider trade surplus in the fourth quarter.