17
April 2024
SA's annual inflation rate eased to 5.30% in March 2024
Adriaan Pask
Chief Investment Officer, PSG Wealth
Event
South Africa’s annual inflation rate eased to 5.30% in March 2024, from a four-month high of 5.60% in February, but remained above the midpoint of the SARB's target range of 3% to 6%.
- Data from Statistics South Africa shows that prices softened across several CPI categories, including food and non-alcoholic beverages (5.10% vs 6.10% in February); alcoholic beverages and tobacco (4.50% vs 4.80%); transportation (5.30% vs 5.40%); and restaurants and hotels (5.70% vs 6.60%).
- The core inflation rate eased slightly to 4.90% in March 2024, down from an eight-month high of 5% in
February. - Consumer prices inched up by 0.80% on a monthly basis, after a 1% increase in the prior month.
The Impact
- Wednesday saw a modest rise on the JSE, led by miners, while global peers traded in mixed fashion as investors processed the likelihood that interest rates might need to stay higher for an extended period. Among the top gainers were Impala Platinum, Anglo American and Kumba Iron Ore.
- The rand strengthened by 0.18% to R19.06/$ on Wednesday afternoon, while it weakened 0.99% to R20.26/€, and 0.06% to R23.73/£ at 15h30.
- South Africa’s 2-year government bond yield was recorded at 7.57%,while the 5-year and 10-year yields rose to 9.60% and 11.01%,respectively.
The Assessment
This reading in headline inflation supports the view that the South African Reserve Bank could keep the repo rate steady at their next monetary policy committee meeting.
- If inflation continues to tread around the target range, we believe the SARB could also start to cut interest rates later this year.
- The next release date for CPI data is scheduled for Wednesday, 22 May 2024.