19
June 2024
South Africa’s annual inflation rate held steady at 5.20% in May 2024
Adriaan Pask
Chief Investment Officer, PSG Wealth
Event
- South Africa’s annual inflation rate held steady at 5.20% in May 2024, matching April’s rate.
- Data from Statistics South Africa shows that the rates for four of the 12 product groups remained steady,
including food and non-alcoholic beverages (4.70%); housing and utilities (5.80%); as well as education
(6.30%). Furthermore, prices decelerated for restaurants and hotels (6.50% vs. 7.50% in April), and higher rates were observed in transport, alcoholic beverages and tobacco, as well as recreation and culture. - The core inflation rate also remained unchanged in May 2024, holding steady at 4.60%, consistent with
April's figure. - Consumer prices increased by 0.20% on a monthly basis, after it stood at 0.30% in the prior month.
- Download the latest press release from Stats SA here
The Impact
- On Wednesday morning, the FTSE/JSE All Share Index rose by nearly 2% to reach approximately 81 100 points, hitting an all-time high and extending its gains for the third consecutive session. Resource-linked sectors, financials, and industrial stocks remained strong performers. Market sentiment has been bolstered by optimism following the elections in South Africa.
- The rand strengthened by 0.24% to R17.98/$ on Wednesday morning, by 0.15% to R19.33/€, and 0.01% to R22.91/£ at 10h50.
- South Africa’s 2-year government bond yield was recorded at 7.57%,while the 5-year and 10-year yields rose to 9.10% and 10.79%,respectively.
The Assessment
- Given the strong rand, there is an outside chance that the South African Reserve Bank might lower rates during the upcoming meeting in July, if the rand maintains its strength or gains further. If the scenario does play out, we don’t see rates being kept unchanged until after the September meeting.
- The next release date for CPI data is scheduled for Wednesday, 24 July 2024.