South Africa’s annual consumer inflation rate dipped to 4.8 percent in October, from 5.1 percent in September, Statistics South Africa said on Wednesday.
Stats SA said consumer prices increased by 0.3 percent in October from their levels in September.
“On average, prices increased by 0.3% between September 2017 and October 2017,” Stats SA said.
Meanwhile, FNB said that October headline inflation decelerated, “slightly more than we had anticipated, to 4.8% y/y from September’s 5.1% print.”
“Core inflation also softened to 4.5% y/y. Food and non-alcoholic beverage inflation fell from 5.5% in September to 5.3% in October, driven lower by a -3% contraction in bread and cereal prices,” said Senior Economist, Jason Muscat.
“Encouragingly, meat prices are showing signs of having peaked, registering 15.5% y/y from October’s 15.6%. Clothing inflation also continues on its downward trajectory, slowing to 1.9% y/y in the month, having been as high as 5.4% just a year ago,” he said.
Muscat said that petrol price inflation eased to 10.8% y/y from 12.2% the previous month and was one of the main factors behind the headline moderation.
“The number is again reflective slack domestic demand and while there is scope at these levels for the Reserve Bank to be more accommodative, we expect interest rates to remain unchanged at tomorrow’s MPC meeting given significant event risk (ratings downgrades, elevated oil price, weaker rand, ANC policy and elective conference, Eskom tariff application).”
Muscat said “it appears that the interest rate cut this year may have been a once-off, rather than the beginning of a lowering cycle.”
“We expect a further moderation in November CPI to 4.7% y/y,” he said.
