Inflation slows to 6%‚ but interest rate hikes can’t be ruled out: bank

24 August 2016 - 14:24 By TMG Digital

The deceleration of consumer inflation to 6% in July from 6.3% in June - marginally lower than the consensus forecast of a slowdown to 6/1% - “stemmed mainly from a lower electricity price increase this July”. That’s according to the Nedbank Economic Unit‚ which said it hadn’t “ruled out further interest rate hikes by the Reserve Bank as inflation is still expected to average above 6 % for the remainder of this year”.It said the “softer inflation number” came “from a lower electricity price increase this July”‚ when prices went up “a more modest 7.4%” compared to 112% last year. “The rand will play an important role as to the trajectory of rates. Factors that will impact the rand and so the interest rate trajectory include whether the country's credit rating will be downgraded to below investment grade‚ the timing of US monetary policy tightening as well as the domestic political situation‚” it added in a statement.The bank predicted that “short-term inflation will remain contained due to the rand strength that was experienced towards the middle of the year‚ but the most recent rand weakness‚ if sustained‚ could lead to some upward inflation pressure later in the year”.The statement was made as the rand was sliding sharply to major currencies on news that Finance Minister Pravin Gordhan faced possible arrest by the Hawks over its probe into the South African Revenue Service’s controversial rogue spy unit...

There’s never been a more important time to support independent media.

From World War 1 to present-day cosmopolitan South Africa and beyond, the Sunday Times has been a pillar in covering the stories that matter to you.

For just R80 you can become a premium member (digital access) and support a publication that has played an important political and social role in South Africa for over a century of Sundays. You can cancel anytime.

Already subscribed? Sign in below.



Questions or problems? Email helpdesk@timeslive.co.za or call 0860 52 52 00.