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SA consumer price inflation slows to 3.1% y/y in December

This marks the third consecutive month of price deceleration – Nedbank.
Image: Chris Ratcliffe/Bloomberg

South Africa’s headline consumer price inflation slowed to 3.1% year-on-year in December from 3.2% in November, data from Statistics South Africa showed on Wednesday.

On a month-on-month basis, the CPI rose to 0.2% in December from 0.0% in the previous month.

Core inflation, which excludes prices of food, non-alcoholic beverages, fuel and energy, was at 3.3% year-on-year in December, the same as in November. On a month-on-month basis core inflation quickened to 0.2% from 0.0% previously.

Nedbank’s Group Economic Unit said this marks the third consecutive month of price deceleration, reflecting weak domestic demand.

“The renewed adjusted level 3 lockdown imposed towards the end of December will most likely keep inflation flat over the next few months. Some upward price pressure is expected thereafter, peaking around May, mainly as a result of base effects from last year’s trough. An uptick in fuel and food prices which will push prices to average around 4.1% in 2021.”

“Although prices are forecast to edge higher, the current weak and uncertain economic environment, renewed lockdowns and subdued demand pose downside risks. We believe that the Reserve Bank has provided sufficient stimulus since the pandemic struck last year, and therefore expect rates to remain unchanged at tomorrow’s (Thursday’s) MPC meeting, and to remain flat throughout 2021.”

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