South Africa's inflation drops to 2.80% as fuel prices drive the slowdown

20

November 2024

Market News Macro Economic Insights

Adriaan Pask

Chief Investment Officer, PSG Wealth

South Africa’s annual inflation rate dropped for the fifth consecutive month to 2.80% in October 2024, from 3.80% in September.
Declining fuel prices continue to be the main driver behind the slowdown. Petrol and diesel prices fell by
5.30% between September and October, pushing the annual fuel price rate down to -19.10%.
Additionally, prices moderated for several CPI items - restaurants and hotels (5.90% compared to 7.40% in September), food and non-alcoholic beverages (3.60% compared to 4.70%), alcoholic beverages and tobacco (4.50%compared to 4.70%), and health (4.80% compared to 5.10%).
The core inflation rate eased in October 2024, coming in at 3.90% the lowest since April 2022.
Consumer prices decreased by 0.10% on a monthly basis in October 2024, after a 0.10% increase in
September.

The FTSE/JSE All Share Index climbed over 1% to around 85 400, marking its fifth consecutive day of gains, in line with global market trends. On the corporate front, retailers, financials, industrials as well as metals and mining were among the strongest performers.
The rand weakened by 0.36% to R18.13/$ on Wednesday afternoon and weakened by 0.02% to R19.13/€, and 0.15% to R22.95/£ at 13h42.
South Africa’s 2-year government bond yield was recorded at 7.57%,while the 5-year and 10-year yields rose to 8.33% and 9.22%, respectively.

Although the South African Reserve Bank's Monetary Policy Committee (MPC) bases its decisions on the projected movements of inflation, the latest figure is likely to give the committee room to cut rates when it announces its decision tomorrow, 21 November.
During the September monetary policy committee (MPC) meeting, MPC members voted for a 25 basis points cut, bring the interest rate at 8%.
The next release date for CPI data is scheduled for Wednesday, 11 December 2024.