Marcia Klein

Marcia Klein

Inflation continues to edge down, albeit marginally, paving the way for Reserve Bank governor Tito Mboweni to announce another interest rate cut today.

Inflation slowed to 8,5percent year on year in March from 8,6percent in February, according to the latest consumer price index (CPI) data from Statistics South Africa.

The inflation figure was slightly higher than the 8,4percent consensus forecast in the Reuters poll of economists.

Nevertheless, economists said the continued downward trend in inflation indicated that the bank would opt for another interest rate cut today.

Mboweni is expected to announce a 100 basis point drop in the repo rate to 8,5percent.

Interest rates have, so far, dropped 250 points since December and the Monetary Policy Committee has stepped up the frequency of its meetings to almost every month in order to monitor interest rates.

Industrial Development Corporation economist Lumkile Mondi said that because the trend was still down, he expected an 100 basis point cut today, which would go a long way towards helping companies and consumers struggling under the weight of debt.

Mondi is optimistic that inflation could fall to the three percent to six percent target band within the next three months.

Standard Bank economist Danalee van Dyk said in her CPI alert that some upward surprises included education fees, recreational and cultural services and alcoholic beverages, the latter reflecting increased sin taxes announced in the February Budget.