In a welcomed development, South Africa’s inflation rate decreased to 3.8% in September, down from 4.4% in August, marking the first time it has fallen below 4% since early 2021, Cape {town} Etc reports.
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This decline aligns with predictions from economists surveyed by Bloomberg and signifies a promising trend for the country’s economic landscape.
The latest figures indicate that inflation has remained below the 4.5% midpoint of the Reserve Bank’s target range for the second consecutive month. As the monetary policy committee prepares for its next meeting on 21 November, expectations are growing for a potential cut in interest rates. Analysts anticipate a reduction of 25 basis points, which would lower the prime rate to 7.75%.
A key factor contributing to this easing of inflation has been a drop in fuel prices, with petrol and diesel rates returning to levels not seen since earlier this year.
The global oil market has faced challenges due to diminishing demand amid a slowing economy, further helping to ease inflationary pressures.
In September, the Consumer Price Index (CPI) increased by 0.1% compared to the previous month, maintaining the same rate.
‘Inflation is well-managed in South Africa; we are entering a period of around six months where the headline CPI is expected to remain below 4%,’ stated independent economist Elize Kruger.
The transportation sector was particularly influential in this decline, entering deflation for the first time in over a year. The annual inflation rate for transportation plummeted from 2.8% in August to a negative 1.1% in September, largely due to the falling fuel prices.
Other categories also experienced milder annual inflation rates, including bread and cereals, meat, and various sweets and desserts.
Despite a slight reduction in September, hot beverages still recorded the highest annual inflation rate among food and non-alcoholic beverages, standing at 15.8%, down from 17.5% in August.
While some food items, like tomatoes, condensed milk, and instant coffee, continued to see significant price increases, inflation rates for staples like milk, eggs, and cheese remained stable.
This overall cooling of inflation paints an optimistic picture for South Africa’s economy moving forward.
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Picture: Delwyn Verasamy / Gallo Images
