Johannesburg, March 20, 2024 – South Africa’s consumer inflation rate rose to 5.6% in February from 5.3% in January.
Key contributors to the annual inflation rate include food, housing, transport, and miscellaneous goods and services like medical insurance.
According to Reuters, this is the second increase in a row, inching closer to the Central Bank’s upper target. Economists in the country stated this could imply longer waits for rate cuts
The South African Reserve Bank, which has an inflation rate target of between 3% to 6%, will announce a monetary policy decision next week.
The inflation increase surprised most analysts who stressed that it could lead to further delays in interest rate cuts by the Central Bank.
Shaun Murison, a Senior Market Analyst at a financial institution based in Sandton shared his opinion on the increased inflation in the country.
“The news doesn’t bode well for expectations of rate cuts in our local economy for the first half of 2024,” said Shaun Murison
A February poll showed the central bank is expected to wait until at least the third quarter of this year before announcing any interest rate cuts.
David Omojomolo, an African economist at Capital Economics said the stronger-than-expected inflation number will urge the Central Bank to hold on until after the national elections on May 29.
“Officials will want to see some clarity in the make-up of the next government and the direction of fiscal policy before feeling comfortable lowering interest rates,” Omojomolo said.
General elections will be held in South Africa on May 29 to elect a new National Assembly as well as the provincial legislature in each province. (GBN)
