Easing inflation numbers spark interest rate cut optimism

Stats SA says that on a month-to-month basis, CPI declined by 0.2%

- YOGASHEN PILLAY

SOUTH Africa's annual consumer price inflation (CPI) eased to 3.3% in August from 3.5% in July, Statistics South Africa reported on Wednesday.

The softer-than-expected outcome has raised hopes for an interest rate cut when the South African Reserve Bank's (Sarb) Monetary Policy Committee (MPC) meets on Thursday.

Headline inflation edged closer to the Sarb's new 3% target announced in July, while core inflation - which strips out food, nonalcoholic beverages, fuel, and energy prices - rose marginally from 3.0% to 3.1%.

Stats SA said that on a month-tomonth basis, CPI declined by 0.2%.

Food prices were a key driver of the slowdown. Overall food inflation fell from 5.5% in July to 5.2% in August, with cereals and vegetables recording notable declines, alongside a moderation in meat prices.

Old Mutual Group chief economist Johann Els said inflation was "lower than expected," reinforcing the case for easing.

Investec chief economist Annabel Bishop said the August outcome "was closer to the new 3.0% inflation target," and that inflationary pressures were virtually absent in the latest data.