SA’s inflation rate keeps dipp

SA’s inflation rate keeps dipping, could prompt a Reserve Bank rates cut

Now there’s something that’s bound to turn a few frowns upside down.

SA’s inflation rate keeps dipp

Not everything in 2017’s been all that bad. The Rand, for one, is stronger than it’s been in over 20 months and data released by Statistics South Africa this week pointed to a drop in consumer inflation.

With the latest inflation figures sitting at 6.3%, 0.3% down from a year ago, and those in the know saying they’ll keep dropping; the general consensus is that South Africa is in for some financial relief as the year goes on.

So, why is everyone suddenly so optimistic? Well, the Rand is soaring on the back of stabilising global markets, renewed investor confidence in South Africa and a narrowing account deficit at just 1.7% of GDP – the best place it’s been in six years –.

To sum it all up, a stronger Rand means a decrease in inflation, which makes for cheaper food and booze and all-round happier South Africans. Happy South Africans help boost SA’s image, makes doing business here more attractive and everyone wins.

Ok, so that’s all a little too optimistic, but there’s some merit to looking on the bright side right now.

See, with the stronger Rand taking pressure off consumers it would seem as if the Reserve Bank might, in the latter half of this year, ease up on fiscal restraints aimed at keeping us afloat, which means lower interest rates.

By cutting the interest rate folks who’ve borrowed money get a little relief, further helping the economy by freeing up some more cash to make its way into the retail sector.

All ‘n all 2017 might turn out to be a pretty neat year for the South African economy. Again, there’s a caveat, as real economic growth won’t be nearly as fast as we need it to be, but it’s a leap in the right direction at least.