Raft of data out this week

This week will be a busy one in terms of economic data with the tabling of the medium-term budget statement, and the release of the Reserve Bank's leading indicator, and of consumer and producer inflation figures.

The Reserve Bank will publish the forward-looking leading economic indicator for August tomorrow.

The indicator provides a guideline for economic growth for at least six months ahead. It fell for the seventh consecutive month year on year in July, supporting the view that domestic economic growth would slow more than expected this year. The index was at 130.4 in July.

Consumer inflation figures for September are due from Statistics SA on Wednesday.

Consumer inflation, which the Reserve Bank strongly considers in making its interest rate decisions, is expected to have ticked up slightly to 5.2% year on year in September from 5.0% year on year in August, according to a survey of leading economists by I-Net Bridge. The forecasts of the 10 economists ranged from 5.0% to 5.3%.

Standard Bank economist Thabi Leoka said the bank expected the upward trend in consumer inflation to emanate from the transport index, mainly because of the 93c a litre increase in the petrol price. Standard Bank expected the transport index to have risen to 5.1% year on year in September from 4.9%.

Leoka said the pass-through from higher agricultural commodity prices was largely absent for now.

"We expect some pass-through from higher maize and wheat prices in the fourth quarter of 2012 and a persistence of this pressure in the first quarter of 2013," Leoka said.

Producer inflation figures will be released on Thursday by Statistics SA but they are widely expected to be overshadowed by Finance Minister Pravin Gordhan's medium-term budget speech later in the day. Producer inflation is expected to have risen to 5.3% year on year in September from 5.1% year on year in August.

Economists predictions ranged from 4.6% to 6.5%.

This year's budget speech will be keenly watched by the markets as they await news from the minister on government borrowing and expenditure, and revisions to earlier economic growth forecasts in light of recent adverse developments in South Africa.

These include wildcat strikes in the key sectors of mining and transport, as well as sovereign debt downgradings by rating agencies and forecasts of more to come.

Weaker-than-expected growth this year will force the Treasury to "roll back" its more positive outlook from the February budget, according to Bank of America Merrill Lynch economist Matthew Sharratt.

In the February budget, Gordhan forecast 2012 economic growth at 2.7% and said borrowing would reach R153-billion in the current financial year.