THE case for the SA Reserve Bank to stay its hand on interest rates was boosted yesterday‚ when data showed consumer inflation slowed as expected last month.
Statistics SA said the consumer price index (CPI) rose 6.2% year on year in April‚ slowing from 6.3% in March and 7% in February. The consensus forecast was for CPI to rise 6.2%.
Nomura economist Peter Attard Montalto’s CPI forecast was above the consensus at 6.4%‚ and he estimated the chance of the Reserve Bank’s repo rate rising from 7% to 7.25% at 45%. Investec economist Kamilla Kaplan had put CPI at a below-consensus 6.1%. “Contributing to this expected moderation will be the lower petrol price increase in April‚ of 88c a litre versus the 162c/l increase in April 2015‚” she wrote in her weekly economics report on Friday.
Most economists are expecting the Reserve Bank to pause in its rate-increasing cycle when it announces the decision of its monetary policy committee meeting today.
The bank has raised rates by 75 basis points this year. Although consumer inflation is still outside the bank’s 3%-6% target‚ the moderating trend of recent months‚ combined with a more stable currency and slow economic growth‚ argue in favour of the bank keeping rates unchanged.
Stats SA data released earlier this month showed mining production fell by a record 18% year on year in March‚ accelerating from a 8.3% fall in February.
Output in the manufacturing sector‚ which contributes 12.5% of GDP‚ contracted a much more modest 2% in March. – BDlive