Consumer inflation might recede

CONSUMER inflation is likely to have receded sharply by June since food prices have declined, a survey of economists showed.

CONSUMER inflation is likely to have receded sharply by June since food prices have declined, a survey of economists showed.

This rekindles chances interest rates might fall again this year.

The Reserve Bank lifted rates by 500 basis points in the two years to June 2008 to rein in inflation, but has reduced them by 450 basis points since last December to ease pressure on an economy now in recession.

It left the repo rate steady at 7,5 percent in June, though, citing the slow pace of decline in the consumer inflation gauge, which remains above the target range.

A Reuters poll of 17 economists showed CPI inflation was expected to have dropped to 7,1 percent year-on-year in June from 8 percent, drawing closer to the 3 to 6 percent band first breached in April 2007.

Stats SA will release June's inflation figures on Wednesday. - Reuters

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