Prices & inflation

extract from MMS Service 26-Jan-01

CPI Review
Summary :   
CPI for December is expected to show a slight decrease on November with overall CPI expected to grow by 7.0% y/y and CPI(X) is expected to grow by 7.6% y/y. Although a decrease, investors should not be too optimistic just yet as to the attainment of the SARB’s inflation targets. The major reason for this decrease has been the downward trend in food inflation which was coming off a relatively high base.Core inflation backs this up with the expectation that it will remain unchanged in Dec.
What’s more, is that the SARB has mentioned on more than one occasionthat it is concerned about the knock on effects of a weak ZAR and a high oil price.Although oil prices have dissipated from two months ago, the ZAR is still close to its all time high against the USD, which will restrict any future petrol price decreases. A petrol price which is still substantially higher than it was a year ago, could therefore put a spanner in the works for the SARB which is under increasing pressure to meet its inflation targets.

 

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e c o n o m e t r i x 26-Jan-01