Figures point to rates rising

BOTH consumer demand and inflation continued to rise gradually from April to May, signalling that interest rates could be hiked sooner than previously expected.

According to Statistics SA, retail trade sales scaled by 3.4% year-onyear in April.

“The main contributors to the 3.4% increase were general dealers (contributing 1.3 percentage points) and retailers in textiles, clothing, footwear and leather goods (contributing 0.7 of a percentage point).”

Regarding inflation, a Stats SA report said the food and non-alcoholic beverages index increased by 0.6% between April and May.

Economist Mandla Maleka said: “While the number was expected, it may give the SA Reserve Bank [SARB] a reason to adjust interest rates higher as soon as possible.

“There is broad consensus that domestic prices are on the rise. Given that, SARB would be hard pressed to be seen to be responding well in time [by] anticipating prices to rise.”

Maleka said the correct approach of the Reserve Bank would be to hike borrowing rates ahead of inflation peaking. –