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SA experiences slight increase in headline consumer inflation

───   OLEBOGENG MOTSE 13:49 Wed, 20 Sep 2017

SA experiences slight increase in headline consumer inflation | News Article
Lullu Krugel Photo: eNCA

Consumer prices in the South African economy increased by 4,8% year-on-year in August, slightly higher than 4,6% in July.


The latest headline consumer inflation figure, released by Statistics South Africa (StatsSA) this morning, revealed that increases in alcohol and petrol prices were the main contributors to the monthly inflation increase of 0,1%. Petrol prices increased by 19 cents a litre in August and further increased by 67 cents a litre in September. 

Chief Economist at KPMG, Lullu Krugel, says the drop in food inflation is indicative of some recovery from the drought in parts of the country. Krugels says despite the increase, inflation figures continue to remain within the Reserve Bank’s target of between 3% and 6%, revealing that inflation is losing steam and that the rate at which prices are increasing is slowing down. 

The lower inflation also gives room for the Monetary Policy Committee (MPC) of the Reserve Bank to cut interest rates by 25 basis points, which will be good news for consumers. The Monetary Policy Committee has been meeting over the course of two days and will announce their decision on interest rates tomorrow.

Krugel says consumers should remain cautiously optimistic because the committee will be considering the uncertainty in the economy and they might also be waiting to see what the outcome of Moody’s decision is going to be before lowering interest rates further.


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