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SA consumer price inflation slows to 3.1% in August
South Africa consumer price inflation slowed to 3.1 per cent in August, down from 3.2 per cent in July. On a month-on-month basis core inflation fell, to 0.2 per cent from 0.7 per cent previously. Patrick Kelly, Chief Director at Stats SA joins CNBC Africa for more.
Wed, 30 Sep 2020 10:55:25 GMT
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AI Generated Summary
- Consumer price inflation in South Africa decreased to 3.1% in August, down from 3.2% in July, signaling a positive shift in the country's economic landscape.
- The decline in inflation levels is attributed to various factors, including the impact of the lockdown and subsequent reopening of the economy, with key sectors like food and transport driving the recent changes.
- The structural inflation outlook has shown a significant decline over the years, with the current rate of 3.1% marking a substantial decrease from previous years, providing a favorable outlook for South Africa's economic recovery.
Consumer price inflation in South Africa slowed to 3.1% in August, down from 3.2% in July, offering a glimmer of optimism amid the country's economic reopening efforts. On a month-on-month basis, core inflation fell to 0.2% from 0.7%, reflecting positive trends in key sectors such as food and transport. Patrick Kelly, Chief Director at Stats SA, highlighted that the decline in inflation levels is a result of various factors, including the impact of the lockdown and subsequent reopening of the economy. The average inflation rate for the year so far stands at about 3.4%, with pre-lockdown levels at 4.4%, indicating a significant decrease in inflation rates. Kelly noted that the recent monthly changes were primarily driven by food and transport, with minor fluctuations in petrol prices playing a key role. While petrol prices increased slightly between August and July, the overall contribution to the monthly change was minimal. The gradual slowdown in food prices, particularly in essential items like cereals, meat, and dairy products, is also contributing to the easing of inflation pressures. Looking ahead, the sustainability of the current inflation rate will depend on the trajectory of food and petrol prices. Kelly emphasized that if the current trends persist, there is likely to be minimal pressure on overall inflation rates. The structural inflation outlook in South Africa has also shown a significant decline over the years, with the current rate of 3.1% marking a substantial decrease from previous years. The Reserve Bank's target of 4.5% has consistently been surpassed, indicating a favorable trend towards lower inflation levels. Kelly highlighted the importance of monitoring key drivers such as food and petrol prices, along with upcoming housing cost data, which could influence future inflation trends. The impact of remote work on property prices and the potential disinflation in the sector add another layer of complexity to the inflation outlook. Despite challenges in certain sectors like the food industry, with fluctuations in maize prices, overall inflation remains subdued. Kelly noted that the transition of prices from producer to consumer levels typically occurs over a few months, suggesting that recent price movements may not have an immediate impact on inflation numbers. Additionally, the anticipation of above-average rainfall could positively impact crop yields, potentially leading to a decrease in food prices. Overall, the current inflation data reflects a positive trend for South Africa's economy, with hopes for continued stability and growth in the coming months.
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