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Standard Bank Group
The SA Daily 12 December 2018

CPI focus today

  • Inflation data for November is scheduled for release today. Our expectations are for headline inflation to have increased by 5.1% y/y, in line with Bloomberg consensus expectations and unchanged from October, with the forecast risk marginally tilted towards the upside.
  • Consumer inflation has been relatively benign throughout the year. Despite the volatility in petrol inflation due to higher oil prices and the weaker rand, food inflation has been subdued. Further, there has been weak evidence of second-round effects of inflation. While consumer price inflation (CPI) has year-to-date (YTD) averaged 4.6%, producer price inflation (PPI) has year-to-date averaged 5.5%, with inflation breaching the upper target of the South African Reserve Bank’s (SARB’s) 3%-6% band in H2:18 with the latest October number at 6.9% y/y.
  • Looking ahead, we expect CPI to average 4.6% this year and 5.3% next year, without breaching the SARB’s upper inflation target band. Further, we have also downwardly revised our growth forecasts to 0.7% and 1.7% in 2018 and 2019 respectively. Given our expectation, we still believe that the SARB will not hike interest rates over the next 12 months.

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