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Inflation slows as food price rises ease

Slide bolsters likelihood of Reserve Bank keeping interest rates on hold.

JOHANNESBURG – South Africa’s consumer inflation eased in March as the return of rainfall following a severe drought cut into food price inflation.

The slide — to 6.1% year-on-year in March from 6.3% in February — bolstered the likelihood of the central bank will keep interest rates on hold despite recent shocks to the currency. On a month-on-month basis, inflation fell to 0.6% from 1.1%, Statistics South Africa said on Wednesday.

The rand retreated about 12% after of President Jacob Zuma’s decision to fire respected finance minister Pravin Gordhan in early April. The firing lead at least in part to two credit downgrades to “junk” and a spike in investor concerns over the direction fiscal policy.

Such moves would normally boost inflation, putting pressure on central banks to raise interest rates.

But Paul Sirani, chief market analyst at Xtrade, said the data would let the South African central bank stand pat.

“Today’s figure shows that prices are heading in the right direction, though policymakers are likely to sit on their hands and seek further reassurance from next month’s figures,” he said.

Food inflation, which climbed close to 12% in 2016 as the worst drought in decades swept through southern Africa, continued to retreat, slowing to 8.7% on a yearly basis.

At its March policy meeting, South Africa’s Reserve Bank (Sarb) said it forecast consumer price growth to average 5.9% in 2017 and that it had reached the end of its tightening phase, adding that any rate cuts would depend on data.

However the bank, which has raised benchmark lending rates by a cumulative 200 basis points since 2014, warned on April 10 that the sharp fall in the currency following Zuma’s midnight cabinet reshuffle had caused the exchange rate to re-emerge as a major risk to inflation.

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When the poorest of the poor have no money left to buy the very basics, we the public will expect an explanation from Malusi Gagupta and Jacob Zupta as to why they are dining well while the rest of the country starves to death.

….and the reply will be “let them eat cake”,…. then you know what will happen next!

Yes. The African Spring.

It’s sure not possible to see food prices so-called “easing!” In fact, the opposite; check meat prices per kg, cheese, chicken, biscuits, weatbix – many items.

Petrol price hike of about 60c/lt in may expected – THAT would be the right time for South Africans to take to the streets again, with the petrol price increase so that financially illiterate and the poor don’t fall for the total *># that ANC ministers like the national one for WATER, and Jessie Duarte (the tannie that should be baking cookies for her grandchildren in the kitchen given her lack of BASIC understanding of an economy, despite being in a top government position AND getting the perks that go with it), sprout forth at youth league rallies.

ANC treasurer-general, you should either have educated your ANC crooked ministers years ago, or in fact, they should NEVER have been appointed in the 1st place. Their ignorance and arrogance is a disgrace and embarrassment to our country!

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ZAR / Euro



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