Share

Rand biggest risk to inflation

Johannesburg - Inflation was expected to remain above the SA Reserve Bank's (Sarb's) 6% upper target range for the rest of the year, Nedbank said on Wednesday.

"The biggest risk to the inflation trajectory remains the rand," the bank's economic unit said in a statement.

"Inflation pressures will, though, be mitigated by the recent slowdown in global food prices as well as the drop in oil prices."

It expected next month’s inflation release to show that petrol prices remained flat for the first time since January 2009.

Earlier on Wednesday, Statistics SA said the consumer price index (CPI) for all urban areas was 6.3% in July compared to 6.6% in June. On average prices increased by 0.8% between June and July this year.

Nedbank's economic unit said the Sarb's monetary policy committee (MPC) raised the prime lending rate by 25 basis points in July in an effort balance increasing inflation and a weakening economy.

"The MPC reiterated that interest rates are in a rising cycle and that at some point they will have to be 'normalised'.

"The implication is that the MPC will continue to talk tough but to act as moderately as possible. The next hike will probably again be 25 basis points and will probably be in November," it said.

Statistics SA said most municipalities introduced new tariffs in July each year, resulting in housing and utilities contributing 0.5 of the 0.8% price increase.

Electricity tariffs increased seven percent, slightly lower than the maximum 7.4% stipulated by the National Energy Regulator of SA.

Water and assessment rates, which were not regulated, increased more, by 9.2% and 7.2% respectively.

The petrol price increased by a moderate 29 c/l in July, which brought the annual increase in petrol down to 8.3%, from the short-term peak of 14.3% seen two months ago.

Last July, the annual increase in the petrol price was 22.6%.

Food inflation appeared to be moderating as prices dropped from last month in the bread and cereals (1%), meat (0.3%) and fats and oils (1.4%) categories.

The drops were largely as a result of improved harvests of grains (maize and wheat) and oil-bearing plants (sunflowers). Maize forms a large part of the feed for cattle and chickens.

Cigarette prices showed a 3.7% monthly spike, bringing the annual increase for tobacco products to 7.2%.

The increase appeared to be a late implementation of increases in excise taxes, related to the introduction of new stock.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.89
+0.3%
Rand - Pound
23.87
+0.1%
Rand - Euro
20.39
+0.2%
Rand - Aus dollar
12.32
+0.1%
Rand - Yen
0.12
+0.2%
Platinum
908.05
0.0%
Palladium
1,014.94
0.0%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders