South Africa Consumer Price Inflation rate decreased to 5.7% in January

South Africa Consumer Price Inflation rate decreased to 5.7% in January

According to statistics issued by Statistics South, headline Consumer Price Inflation (CPI) fell to 5.7 percent in January from 5.9 percent in December, owing primarily to decreasing fuel prices.
Motorists and companies sighed a little easier in January as fuel prices decreased by 2.8 percent   from the record highs in December 2021.
Food and non-alcoholic drinks, housing and utilities, and other goods and services all helped to lower the yearly inflation rate.
Core inflation, which removes food and non-alcoholic drinks, as well as fuel and energy prices from the CPI, came out at a moderate 3.5 percent , reflecting the impact of rising commodity prices.
An Economist at Nedbank, Candice Reddy, says food and fuel inflation, as well as the rand-dollar exchange rate remains a risk to the inflation outlook.
“The upside risk to the food inflation is due to weather conditions globally and generally and still elevated global food prices which will kind of offset the optimistic crop outlook domestically.
And then on the transport of fuel side, although we do have oil prices focused to fall throughout the year we have seen that it has persisted at higher levels for much longer due to supply constraints, so the trajectory will depend much on developments on the supply side,” says Reddy.
An Economist at Absa Bank, Miyelani Maluleke, says while higher fuel inflation remains a risk as a result of rising Brent Crude Oil prices, the Reserve bank is not expected increase rates too rapidly.
“We probably going to see more interest rate increases this year probably into next year, but we don’t think that the SARB is going to be aggressive in its interest rate cycle.
We do have an economy that remains somewhat weak, it’s still recovering from the impact of the COVID-19 pandemic.
“We don’t think they’ll want to raise interest rates too rapidly,” Maluleke adds, citing an inflation trend that is moving downward for the rest of the year.
Analysts have predicted a one-rand-twenty-cent increase in the price of gasoline starting in March.

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