South Africa Inflation Dips Below 4% First Time in Over Three Years

Daba Finance/South Africa's Inflation Dips Below 4% First Time in Over Three Years

BREAKING NEWSOctober 23, 2024 at 4:12 PM UTC

TLDR

South Africa’s inflation rate drops to 3.8% in September, below 4% for the first time in over three years, aligning with economists' forecasts.
Lower inflation rate supports potential interest rate cuts by the South African Reserve Bank, now at the lower end of the SARB’s 3%-6% target range.
Factors include softer transport inflation from reduced fuel costs and favorable food harvest, though cautious stance remains due to economic uncertainties.

South Africa’s inflation rate fell to 3.8% in September, marking the first time it has dipped below 4% in more than three years, according to Statistics South Africa.

This inflation drop, from 4.4% in August, aligns with economists' forecasts and strengthens the case for further interest rate cuts by the South African Reserve Bank (SARB).

The inflation rate is now at the lower end of the SARB’s 3% to 6% target range, driven by softer transport inflation due to lower fuel prices and a favorable food harvest. However, the SARB remains cautious amid lingering uncertainty about the broader economic outlook.

Key Takeaways

Analysts expect the central bank to cut rates by 25 basis points in its next meeting on November 21, following a similar move in September. The rand weakened by 0.5% against the dollar following the news, while yields on bonds maturing in 2035 rose to 10.66%. Economists forecast inflation to remain below the SARB’s midpoint target in the coming quarters, supporting further rate reductions in early 2024.

South Africa

Inflation

Consumer Prices

SARB

Economy

Interest Rates

Rand