Good news for consumers after inflation rate falls

HARD-hit South African consumers forked out a little less at the tills last month as consumer price inflation returned to the South African Reserve Bank’s target inflation band for the first time since August.

The latest inflation figures, released by Statistics South Africa yesterday, were welcomed by economists, amid concerns about weak economic growth.

According to Stats SA, inflation last month dropped to 5.3%, from 6.1% in March.

Food and non-alcoholic beverages price inflation decreased from 1.5 percentage points in March to 1.1 percentage points last month, while transport decreased from 1.2% to 1.1%.

Miscellaneous goods and services decreased from 1.2 percentage points in March to 1.1 percentage points last month.

Central bank spokesman Zamandlovu Ndlovu said yesterday that the Monetary Policy Committee was sitting and its inflation outlook would be made public this afternoon.

NMMU Business School director Dr Randall Jonas said: “The latest report from Stats SA that inflation has dropped to below 6% in April signals a few positive outlooks.

“However, the easing of inflation does not remove the concerns about weak economic growth,” he said.

“It is nevertheless encouraging news and seems to suggest a downward cycle in the period ahead.

“A lower inflation rate means a slowdown in the rise in the cost of living.

“In addition, the lower rate could boost spending and investment, some of the key elements of economic growth.

“[But] the outlook for real economic growth remains slender,” Jonas said.

“Other positive effects for the South African economy are more competitiveness in areas of exports.”

The Nelson Mandela Bay Business Chamber said: “In the current economic climate where consumers are feeling the strain on household incomes, we welcome the drop in inflation and food prices.

“We sincerely hope the trend will continue, as we look to real growth in our economy this year.”

FNB senior economist Mamello Matikinca said: “This notable improvement was largely due to a decline in goods inflation, food in particular, which printed lower than our estimate of 7.4%.

“Food inflation rose 6.7% in April from 8.7% in March – the deceleration was due to a contraction in the prices of vegetables, fruit, milk and cheese.

“The rise in bread and cereal prices was marginally lower than our forecast, while meat prices were in line with expectations.”