SLOWING INFLATION GIVES SARB ROOM TO EASE POLICY

SOUTH African inflation slowed for the first time in three months in August, remaining close to the bottom of the target range set by the SA Reserve Bank ( SARB). Consumer prices rose 3.1 percent from a year earlier, compared with 3.2 percent in July, Statistics SA said yesterday in a statement. The drop may provide some room for the SARB to ease policy further in November, if the outlook for the economy continues to deteriorate. The monetary policy committee kept its key rate at 3.5 percent earlier this month after 300 basis points of easing and said inflation will remain close to the 4.5 percent mid point of its target range in 2021 and 2022. The benign outlook will allow monetary policy to remain accommodative for most of the next two years and for stimulus to be withdrawn in a gradual fashion, Fundi Tshazibana, a deputy governor of the SARB, said last week. Core inflation, which excludes the prices of food, non- alcoholic drinks, fuel and electricity, quickened to 3.3 percent, the highest level since March, from 3.2 percent. Further easing of lockdown restrictions in August meant all items – except sports tickets – that are included in the inflation basket were available for sale. Substituted values were used for products including alcohol that weren’t legally available for sale during parts of July and August’s lockdown. | Bloomberg