Interest rates to stay high despite inflation plunging to 5-year low

CONSUMERS reliant on credit may have to endure an extended period of restrictive monetary policy before the South African Reserve Bank (Sarb) considers cutting interest rates later this year, despite recent data showing inflation has plummeted to its lowest level in nearly five years.

- SIPHELELE DLUDLA

Data from Statistics South Africa (Stats SA) on Wednesday showed that inflation surprised on the downside and cooled for the first time in five months on the back of lower fuel and education.

Stats SA said the headline consumer price inflation (CPI) fell sharply by 0.5 percentage points to 2.7% in March from 3.2% in February, mainly on account of food and non-alcoholic beverages and fuel prices.

This better-than-expected inflation print marked the lowest reading since June 2020, falling below the lower bound of the Sarb’s 3-6% target range.