South Africa's inflation drops for the second consecutive month
TLDR
- South African monthly inflation rate decreases to 5.1% in December, attributed to a slowdown in food price increases.
- Average inflation rate for 2023 was 6%, 0.9 percentage points lower than 2022 and aligned with the central bank's target range.
- Inflation was high in the first five months of 2023 but subsided below 6% for the rest of the year, with a peak in March at 7.1% and a low in July at 4.7%.
The South African monthly inflation rate experienced a further decrease in December, declining by 0.4 percentage points to 5.1%. This drop was attributed to a slowdown in food price increases, as indicated by official data released on Wednesday.
StatsSA, the national statistics agency, reported that the average inflation rate for the entire year of 2023 stood at 6%. This figure was 0.9 percentage points lower than the 2022 average and aligned with the upper limit of the central bank's official target range.
The agency noted that inflation was relatively high during the first five months of 2023 (January-May), consistently exceeding 6%. However, inflation subsided below this threshold for the remaining seven months of the year. The peak inflation rate in 2023 occurred in March at 7.1%, while the lowest rate was recorded in July at 4.7%.
Key Takeaways
Similarly, the inflation rate for food and non-alcoholic beverages in December was 8.5%, showing a decrease from the 9% recorded in November. Additionally, fuel prices experienced a 2.7% decline, according to StatsSA. The central bank has set an inflation target ranging from 3 to 6% and maintained its primary interest rate at 8.25% in November. It is scheduled to reveal its monetary policy decision on Thursday. Analysts believe that the data released on Wednesday is unlikely to alter the bank's perspective on inflation for the current year. It is anticipated that the Monetary Policy Committee (MPC) will maintain a hawkish tone, expressing concerns about inflation risks. Despite this cautionary stance, the consensus is that the committee will ultimately opt to keep interest rates unchanged.
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