December inflation rises to 4%, matching estimates

South Africa’s inflation remained well below the midpoint of the central bank’s target range in December, even as the rate rose for the first time in four months.

Consumer-price growth quickened to 4% compared with 3.6% in November, Statistics South Africa said Wednesday. That matched the median estimate of 15 economists in a Bloomberg survey. Inflation averaged 4.1% in 2019, in line with the forecast the Reserve Bank published last week. Prices rose 0.3% in the month.

Key Insights

• Inflation has now been at or below the 4.5% midpoint of the target range for 13 months, the longest such streak in 14 years.

• The central bank wants inflation expectations anchored close to the midpoint of it target range of 3% to 6%. While Wednesday’s data show muted price growth, Governor Lesetja Kganyago said last week the monetary policy committee sees the rate averaging 4.7% this year before stabilizing at 4.5% from the third quarter of 2021.

• The MPC unexpectedly cut its benchmark interest rate to the lowest level in four years last week and its quarterly projection model implies another cut of 25 basis points in fourth quarter of the year.

• Annual core inflation, which excludes the prices of food, non-alcoholic drinks, fuel and electricity, slowed to 3.8%, staying near an eight-year low.