South Africa’s inflation jumps to 5.4% in Sep

Consumer price inflation (CPI) in South Africa increased to 5.4% in September from 4.8% in August, according to Stats SA. Similarly, data released by the Namibia Statistics Agency (NSA) revealed that annual inflation locally also stood at 5.4% in September, compared to 4.7% registered in August.The South African Reserve Bank (SARB) monetary policy committee prefers to anchor inflation expectations close to the 4.5% midpoint of its 3%-6% target range.According to SARB’s six-monthly Monetary Policy Review released on Tuesday, headline CPI inflation has moderated since the April 2023 MPR, benefitting from strong goods disinflation, especially fuel and food disinflation, as well as tighter monetary policy. The further deceleration towards the 4.5% midpoint of the target range is, however, likely to be slow due to the fading base effects and somewhat sticky core inflation. Upside pressures to core inflation are reflected in still elevated survey-based inflation expectations and a weak rand, with further risks emanating from load-shedding. The recent pickup in global oil prices and expected drier weather conditions add to inflation risks.Headline inflation is projected to average 5.9% in 2023, down from 6.9% in 2022, and to only settle at the midpoint of the target range in the second quarter of 2025.At the previous monetary policy announcement, SARB kept the repo rate unchanged at 8.25%. The repo rate in Namibia currently stands at 7.75%. The fifth monetary policy announcement for the year by the Bank of Namibia (BoN) is expected to take place next week Wednesday.FinancesFin24 reported that South Africa’s strained public finances are hindering economic growth and a return to lower inflation and interest rates, SARB cautioned."Reducing public debt to sustainable levels can deliver a triple dividend, namely lower cost of capital, reduced debt-service costs and lower inflation," the central bank added.The comments come ahead of a 1 November update on the nation’s budget outlook by Finance Minister Enoch Godongwana. He is expected to announce a large revenue shortfall and wider-than-expected budget deficit, aggravated by slower growth and weaker earnings from commodity exports.Godongwana is being pressed by other Cabinet ministers in the ANC to climb down from proposed austerity measures designed to rein in debt and meet stabilisation targets in the wake of drastically lower-than-expected revenue.South African government bond yields have climbed above 12% in recent months even as the country’s inflation rate has declined to 4.8% from above 7%, as investors weigh threats to the public purse.-phillep@nmh.com.na Additional reporting by Fin24

South Africa’s inflation jumps to 5.4% in Sep

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