Data released this week certainly left us feeling lighter as it confirmed the year ahead will be more palatable. The devastating effects of the drought are fading, and the agriculture sector is expected to contribute positively to GDP growth. Growth should lift and inflation should stabilise. In fact, headline inflation positively surprised, slowing to 6.3% year on year in February from 6.6% in January. Importantly, core inflation (CPI excluding food and non-alcoholic beverages, fuel and energy) eased to 5.2% year on year, the lowest rate in over a year, indicating that underlying inflationary pressures are easing. According to our forecasts, this measure of inflation should fall below 5% from the second half of the year. Food inflation continued to moderate, rising 9.9% in February relative to 11.2% in January. Bread and cereal prices continued to decelerate in February, while vegetable prices contracted for the first time in 16 months, on a year-on-year basis. However, meat prices...
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