Sarb to change its expectations

Pretoria - The South African Reserve Bank (Sarb) is likely to change its estimates for inflation and economic growth prospects for the year, but will not announce revised figures before late July.

The bank currently expects inflation in terms of the consumer price index (CPI) to reach 4.7% in the third quarter. However, Statistics South Africa (Stats SA) announced on Wednesday that CPI inflation in May had already fallen to an annualised 4.6%. Economists believe the indicator could reach a low of close to 4% in the next quarter.

Reserve Bank chief economist Dr Monde Mnyande said on Thursday the bank's inflation and growth prospects were likely to change, but the official estimates would only be announced after the Monetary Policy Committee's next meeting at the end of July.

The bank's official estimate for economic growth in 2010 is currently 2.7%. The economy grew by 4.6% in the first quarter of the year (annualised on a quarterly basis).

The quarterly report also referred to positive movements in several economic indicators, such as the Bureau for Economic Research and the Kagiso Purchasing Managers' Index (PMI) and the Retail Confidence Index for the first quarter. This index, and quite a number of other confidence indices, started weakening in the second quarter.

Mnyande said although the bank is watching these indicators and taking them into consideration, it is not concerned about short-term movements.

"We look rather at the indicators' long-term trends," he said.