South Africa: Inflation recedes in November
Inflation came in at 5.5% in November, down from October’s 5.9%. November’s slowdown, the first in four months, was larger than had been anticipated by some market analysts and brought inflation closer to the mid-point of the South African Reserve Bank (SARB)’s 3.0–6.0% target band. Looking at the details of the release, November’s deceleration chiefly reflected slower price increases for transport. These more than offset stronger price growth for food, as well as housing and utilities.
Accordingly, the trend pointed down, with annual average inflation edging down to 6.1% in November (October: 6.2%). Meanwhile, core inflation rose to 4.5% in November from October’s 4.4%.
Lastly, consumer prices fell 0.09% from the previous month in November, contrasting the 0.89% increase recorded in October. November’s result marked the weakest reading since January.
November’s softer headline inflation is unlikely to be sufficient for the SARB to begin cutting interest rates when it convenes next on 25 January, with the Bank likely to leave rates unchanged for the fourth consecutive meeting. Meanwhile, inflation in December should have decelerated again amid expected additional fuel price cuts. If the disinflation trend consolidates, the SARB will kick off its monetary policy loosening cycle.