×

We've got news for you.

Register on SowetanLIVE at no cost to receive newsletters, read exclusive articles & more.
Register now

Projected deceleration in CPI in 2017 will leaves room for MPC to keep rates on hold

File photo
File photo

A projected deceleration in consumer price inflation in 2017 will provide room for the SA Reserve Bank (SARB) to maintain the repo rate at 7.0% at the November Monetary Policy Committee (MPC) meeting‚ according to Investec economist Kamilla Kaplan.

CPI data for October is due for release on Wednesday‚ followed by producer price inflation data (PPI) for the same month on Thursday. |

 “CPI inflation is forecast to have risen by 6.0% year on year (y/y in October versus a prior 6.1% y/y and is expected to average 6.0% y/y in the fourth quarter‚” says Kaplan.

“In October‚ food and petrol price dynamics are likely to have remained the key influencing factor on the headline CPI outcome. Specifically‚ the food and petrol price components should reflect the continued lagged drought effects‚ as well as the petrol price hike of 43c/litre in the month of October‚” she says.

PPI inflation is forecast to have decelerated to 5.9% y/y in October from 6.6% y/y in September‚ Kaplan adds.

 “Advance indications provided by the manufacturing PMI survey suggest the easing in producer price pressures during the third quarter of 2016 persisted into the fourth quarter‚” she says‚ adding that rand appreciation has been a contributing factor.

“The moderation in PPI inflation and the SARB’s projection of CPI inflation returning to the target range in 2017‚ provides some room for the SARB to keep interest rates unchanged at its upcoming November MPC meeting.

 “Specifically‚ the SARB forecasts inflation to average 6.4% in 2016 and 5.8% in 2017. The SARB has noted that should these forecasts transpire it ‘may be close to the end of the tightening cycle’‚” notes Kaplan.

 Also due for release this week is the leading economic indicator for September.

 

 

 

 

 

 

 

 

Would you like to comment on this article?
Register (it's quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.