south africa reserve bank sarb interest rate

The South African Reserve Bank’s (SARB) Monetary Policy Committee (MPC) voted to keep interest rates on hold on Thursday, 23 November. Image: @SARB

Inflation numbers spell GOOD interest rate news for South Africans

South Africa’s inflation dropped to the lowest level in 20 months in June, slipping back within the central bank’s target range.

by AFP

19-07-2023 14:14

in Business & Finance

The South African Reserve Bank’s (SARB) Monetary Policy Committee (MPC) voted to keep interest rates on hold on Thursday, 23 November. Image: @SARB

South Africa’s inflation dropped to the lowest level in 20 months in June, slipping back within the central bank’s target range, official data showed on Wednesday.

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Annual consumer price inflation slowed to 5.4 percent last month, down from 6.3 percent in May, national statistics agency StatsSA said in a statement.

The drop was the steepest since May 2020 and brought the rate within the Reserve Bank’s 3 percent to 6 percent target range for the first time since April 2022, the agency said.

“The rate in June is the lowest reading in 20 months,” it said.

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Price rises for food and non-alcoholic beverages slowed to 11 percent from a high of 14 percent in March.

Prices of oils and fats also decreased for a tenth consecutive month.

Wine and beer were instead on the up, pushing prices for alcoholic beverages and tobacco to 6.1 percent from 5.9 percent in May.

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“Annual transport inflation tumbled from 7% in May to 1.8% in June, dragged lower mainly by softer fuel prices,” StatsSA added.

Policymakers around the world are battling elevated inflation caused largely by surging energy and food prices following Russia’s invasion of Ukraine.

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South Africa’s central bank raised its main interest rate to 8.25 percent – a 14-year high – in May. It added that it expected inflation to average at 6.2 percent this year.

The above numbers have raised the possibility that the SARB will keep interest rates the same when it announces its decision on Thursday, 20 July at 15:00.

Another 25 basis point hike had been the general consensus among experts prior to the StatsSA numbers being released.

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