Consumer price inflation edges higher to 4.9% in August 2021 from 4.6% in July 2021
Highlights
Headline consumer price inflation edged higher to 4.9% y/y in August 2021 after easing to 4.6% y/y in July 2021, in line with Bloomberg consensus expectations.
Core inflation edged up to 3.1% y/y in August 2021 from 3.0% in July 2021, showing a persistent weakness in consumer demand.
Major drivers of the rise in headline inflation were fuel prices which rose by 19.6% y/y in August from 15.2% in July.
We forecast that inflation will average 4.0% in 2021 and 4.2% in 2022, drifting around the South African Reserve Bank’s 4.5% mid-point target over the medium-term.
Based on both our and the SARB’s inflation forecasts, we believe the Monetary Policy Committee will retain interest rates at 3.5% at Thursday’s meeting and at least until the end of Q1 2022 but the risks of an earlier hike have increased.
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