SA in­fla­tion: The price may be just about right

The Times (South Africa) - - Business - By ROBERT LAING

● In­fla­tion, as mea­sured by the an­nual change in the con­sumer price in­dex, slowed to 4.6% in Novem­ber from 4.8% in Oc­to­ber, slightly bet­ter than the economists’ con­sen­sus of 4.7%.

The in­dex, set to 100 points in De­cem­ber

2016, rose to 104.2 points in Novem­ber from

104.1 points in Oc­to­ber.

Bet­ter rain­fall con­trib­uted to bread and ce­real prices fall­ing 4.9% from Novem­ber 2016. Other parts of the food in­fla­tion bas­ket that reg­is­tered de­clines in­cluded fruit, which was

4.6% cheaper, and oils and fats, which were

2.3% cheaper.

Meat, on the other hand, rose in price by

14.9%, leav­ing over­all food in­fla­tion un­changed at 5.2%.

The fuel com­po­nent of in­fla­tion came in at


The high­est de­fla­tion in the CPI bas­ket was telecom­mu­ni­ca­tions equip­ment, with prices drop­ping by 16%, ac­cord­ing to Stats SA.

The an­nual change in CPI is the key mea­sure used by the Re­serve Bank’s mon­e­tary pol­icy com­mit­tee to set its repo rate, which cur­rently stands at 6.75%. The com­mer­cial banks by con­ven­tion add 3.5 per­cent­age points to the repo rate to set the “prime rate” they quote to home and car loan cus­tomers.

Slow­ing in­fla­tion would usu­ally raise the hope of a rate cut at the com­mit­tee’s next meet­ing on Jan­uary 18, but the fear of fu­ture in­fla­tion due to the weak­en­ing rand means the repo rate will prob­a­bly re­main un­changed at

6.75% for most of 2018.

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