INTEREST RATES
Inflation slows as food prices decrease
Food inflation is moderating because the drought is dissipating and the rand is comparatively stronger
Consumer inflation slowed in March with a drop in food prices, but economists say interest rate cuts are unlikely until inflation falls back into the Reserve Bank’s target band of 3% to 6%. The consumer price index (CPI) rose 6.1% year on year after a 6.3% increase in February following the dip in food inflation. The food and nonalcoholic beverages index increased 8.7% after rising 9.9% in February. Food inflation is moderating because the drought is dissipating and the rand is comparatively stronger. MMI Investments and Savings economist Sanisha Packirisamy expects a further drop in food inflation in coming months. Improved weather conditions boded well for bread and cereal prices while the 2017 maize harvest was set to nearly double compared with 2016, which would mean lower grain prices. "Global food prices are more or less in line with where they were a year ago. However, translated into rand terms, food prices are around 9% lower than the corresponding period in 2016, providing...
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