Inflation continues its downward trend
The CPI and PPI inflation figures for June 2009 are out.
The year-on-year headline CPI inflation rate for June 2009 is 6.9%, 1.1 percentage points lower than the figure for May 2009.
PPI inflation also came in lower at -4.1%, also down 1.1 percentage points when compared to the figure for May 2009.
You can check out this page if you want to see a chart and table of the CPI inflation rates in South Africa, since 1982.
What do the inflation figures for June 2009 mean?
The CPI figures for June 2009 means that the average South African paid 6.9% more for goods and services in June 2009, than he did one year earlier, in June 2008.
The PPI figures for June 2009 means that the average South African producer paid 4.1% less for goods and services in June 2009, than they did one year earlier, in June 2008.
Both the CPI and PPI inflation rates for June 2009 are significantly lower than they were in May 2009. This is a good indication that inflation will continue to decline, at least for the next few months.
How do the latest inflation figures affect the chances for an interest rate cut?
The inflation rate for June 2009 is still outside the SARB‘s target inflation band of 3% to 6%.
At their last meeting, the SARB decided to leave interest rates unchanged, despite a big noise made by Cosatu to further lower rates.
The SARB clearly demonstrated that they will not allow themselves to be influenced by the likes of Cosatu, and that they will continue to apply their inflation targeting policy.
I therefore don’t expect the SARB‘s monetary policy committee (MPC) to lower the repo rate when they meet again in August.
However, provided that inflation continues to decline, I still think that we’ll see another 50 basis point cut before the end of the year.
July 27th, 2010 at 12:01 pm
Hi Francois
i’m a matric learner in Transvalia High School in Vanderbijlpark with Economics as one of my favourite subjects. I’m currently doing a project on how the Reserve Bank is trying to keep the rate between 3 – 6% and your website is absolutely fantastic. Thank you so much for all the information. You made my life Bliss!!!