Johannesburg - Labour unrest‚ credit rating downgrades‚ a
widening current account‚ coupled with a lagged effect of higher food prices
and higher wage settlements do not bode well for inflation going forward‚
Reserve Bank deputy governor Daniel Mminele warned at an event on Wednesday
These were the same sentiments expressed by Bank Governor
Gill Marcus at a National Union of Metalworkers of SA conference earlier on
Inflation has been rising on elevated food and fuel costs‚
with more upward pressure expected when new weights on the consumer price index
(CPI) basket become effective next year.
Mminele told delegates that the Bank's own estimates
indicated some upward pressure on both headline and core prices to the
magnitude of around 0.2% on headline CPI.
“However‚ I should caution that these estimates are subject
to the final set of price-updated weights which will only be published in
January 2013‚ and as such‚ are subject to change‚” he said.
Mminele noted that alongside a less favourable outlook for
inflation‚ the domestic growth outlook had deteriorated on both US and eurozone
developments‚ and labour market instability.
“Such actions … not only amplify wage pressures‚ but hurt
output growth and export volumes‚ raise the prospects for even higher
unemployment and aggravate the widening in the current account deficit‚” he
The strikes in the mining and transport sectors in the third
quarter dented the pace of economic growth‚ which fell to a growth of 1.2% from
3.4% in the second quarter. The strikes are also expected to have negatively
impacted on growth in the fourth quarter.
“The negative impacts of the strike action on growth have
not fully fed through and we are likely to see further weakness in the quarter
ahead‚” Mminele said.
The Reserve Bank lowered its growth forecast to 2.5% for
this year‚ improving to 3.6% next year‚ cautioning that risks were tilted to
Mminele noted that the combination of low global growth‚
domestic challenges‚ rising wage settlements‚ a weaker rand and higher current
account deficit made “for a very difficult combination of factors” when
monetary policy decisions were being made.
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