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SA’s CPI falls to 4.1% in September
Annual consumer price inflation fell to 4.1 per cent in September from 4.3 per cent in August. Statistics South Africa has cited that inflation has now been below 4.5 per cent for the past three months and remained below the South African Reserve Bank’s 6 per cent monetary policy ceiling since April 2017. Statistics South Africa Chief Director, Patrick Kelly joins CNBC Africa for more.
Wed, 23 Oct 2019 12:06:26 GMT
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AI Generated Summary
- Food, housing, and transport costs remain below 5%, driving the trend of moderate inflation
- Month-on-month inflation stayed unchanged at 0.3%, indicating broad-based moderation in prices
- The property market faces challenges with slow growth and low demand, contributing to low inflation rates in the sector
In a recent report, annual consumer price inflation in South Africa fell to 4.1 per cent in September from 4.3 per cent in August. Dr. Patrick Kelly, Chief Director at Statistics South Africa, highlighted that inflation has been below 4.5 per cent for the past three months and has remained under the South African Reserve Bank's 6 per cent monetary policy ceiling since April 2017. This sustained period of moderate inflation has been driven by key factors such as low inflation rates in major expenditure groups like food, housing, and transport.
Dr. Kelly mentioned that food prices, influenced by external factors like weather conditions, remain below 4 per cent. Housing and utilities costs are just under 5 per cent, while transport costs are around 2.5 per cent. As long as these factors continue to remain stable, the trend of moderate inflation is expected to continue. Factors such as fuel prices affect transport costs, while the pricing of raw agricultural products impacts food prices.
The latest report also showed that month-on-month inflation remained unchanged at 0.3 per cent, with notable contributions from housing rentals. Dr. Kelly explained that the overall inflation moderation was spread across various product groups, indicating a broad-based moderation trend in prices. Some sectors even experienced deflation, with telecommunications equipment and package holidays showing significant decreases in prices.
In terms of the property market, particularly residential rentals, Dr. Kelly noted that the industry has been facing challenges with slow growth and low demand. Housing rentals have been growing at a sluggish pace of approximately 3 per cent, reflecting the subdued state of the economy and weak consumer demand. This situation has also contributed to slow house price growth in the market.
CEOs of property companies have been expressing concerns over low prices within the industry, with rising vacancies and rent cuts becoming common. The impact of these challenges on the broader economy could be seen in the continued period of low inflation rates in the housing sector. Until there is a turnaround in economic conditions and increased demand for housing, the trend of low inflation in the property market is expected to persist.
Overall, the latest inflation figures in South Africa reflect a sustained period of moderate inflation, driven by various factors influencing key expenditure groups. The trend of low inflation rates is expected to continue as long as external factors and economic conditions remain stable.
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