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December inflation quickens to 4%, matching estimate

Consumer-price growth quickened to 4% compared with 3.6% in November.

South Africa’s inflation remained well below the midpoint of the central bank’s target range in December, even as the rate rose for the first time in four months.

Consumer-price growth quickened to 4% compared with 3.6% in November, the Pretoria-based Statistics South Africa said Wednesday in a statement on its website. That matched the median estimate of 15 economists in a Bloomberg survey. Inflation averaged 4.1% in 2019, in line with the forecast the Reserve Bank published last week. Prices rose 0.3% in the month.

Key Insights

  • Inflation has now been at or below the 4.5% midpoint of the target range for 13 months, the longest such streak in 14 years.
  • The central bank wants inflation expectations anchored close to the midpoint of it target range of 3% to 6%. While Wednesday’s data show muted price growth, Governor Lesetja Kganyago said last week the monetary policy committee sees the rate averaging 4.7% this year before stabilizing at 4.5% from the third quarter of 2021.
  • The MPC unexpectedly cut its benchmark interest rate to the lowest level in four years last week and its quarterly projection model implies another cut of 25 basis points in fourth quarter of the year.
  • Annual core inflation, which excludes the prices of food, non-alcoholic drinks, fuel and electricity, slowed to 3.8%, staying near an eight-year low.

© 2020 Bloomberg

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COMMENTS   2

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Above figure may be suitable for the macro financial economy but is nowhere near the reality experienced by anyone who owns a property! Why does core exclude non-alcoholic drinks as this categories weighting must be miniscule? Where are water costs, that of rates and services, increases in medical aid etc,,.? Real inflation is probably closer to 7.5 per cent.
Is it not time more real costs are included in the ‘formula’ and they are apportioned to suit more of what different people experience?

There is no way 4% is accurate. In fact, it’s so inaccurate that it’s basically meaningless at this point.

End of comments.

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