CPI continues to slow ahead of repo rate call

Statistics South Africa (Stats SA) says annual consumer price inflation (CPI) has declined to the lowest level since April 2021, dropping to 4.4% in August from 4.6% in July.

This comes during the Reserve Bank monetary policy committee’s (MPC) meeting this week ahead of the repo rate announcement set for Thursday afternoon.

If the bank does announce a rate cut, it would be the first since November 2021. It is the third consecutive month that consumer inflation has slowed.

The repo rate was last adjusted in May 2023, when the MPC raised it by 50 basis points to 8.25% and has stayed there since.

“Annual consumer price inflation was 4.4% in August, down from 4.6% in July. The CPI increased by 0.1% month-on-month in August,” Stats SA said.

The main contributors to the 4.4% annual inflation rate were:

• housing and utilities at 4.8%, which contributed 1.1 percentage points;
• miscellaneous goods and services at 7%, contributing 1 percentage point;
• food and non-alcoholic beverages at 4.7%, contributing 0.9 of a percentage point; and
• transport at 2.8%, contributing 0.4 of a percentage point.

“In August the annual inflation rate of goods was 4.4%, down from 4.6% in July, and services was 4.5%, down from 4.7% in July.”

While the fuel consumer price index in the statistical report was up 1.8% from August 2023 to August 2024, it was down 0.5% from July to August this year.

The price of 95-octane petrol dropped by 15c per litre in August from July. The average price of diesel in August was at R23.23 compared to R23.25 in July. However, the impact of transport prices on overall inflation have waned, accounting for 9% in 2024 compared to 44% last year.

In August housing and utilities accounted for 25% of the total inflation rate, while food and non-alcoholic beverages rose to 4.7% in August, compared to 4.5% in July.

Business Times