ECONOMIC WEEK AHEAD: Economists will keep eye on consumer price inflation data
Tourist accommodation, land transport survey and food and beverages figures are scheduled for release on Monday, writes Sunita Menon
The consumer price index (CPI) is the one to watch in a week in which the state of the consumer will come into focus. Economists will look out for whether inflation will continue to ease and dip below 5% for the first time since November 2015.
Statistics SA is to release the inflation figures on Wednesday.
On Monday, tourist accommodation, land transport survey and food and beverages figures are scheduled for release, while on Tuesday tourism and migration figures are expected.
The Poverty Trends in SA report, a study of absolute poverty between 2006 and 2015, is scheduled for release on Tuesday. The report will provide new Gini coefficient measures and detail the number of people living under various rebased poverty lines.
In terms of inflation, First National Bank economist Mamello Matikinca said she expected it to fall below 4.6% year on year in July, but warned that risks to the forecast were high.
"Petrol price cuts and lower municipal tariffs should have contributed to the moderation of the headline number. However, we are concerned that the drop in electricity tariffs, following the 2% tariff increase granted by [the National Energy Regulator of SA] may be mitigated by higher water tariffs," she said.
Elize Kruger, senior economist at NKC African Economics, also forecast inflation would ease to 4.6% year on year. But "recent developments on the currency and international oil price have already fed into expected increases of about 60c per litre and 50c per litre in petrol and diesel prices, respectively, in September, which will result in an upward shift in the headline CPI forecast curve".
Investec economist Kamilla Kaplan said that weak economic growth and easing inflation supported the case for further interest rate cuts.
Kaplan forecast inflation to have dropped to 4.7% year on year in July.
BNP Paribas economist Jeff Schultz predicted the same figure.
"Given that inflation is moderating and is expected to ease even further below the Reserve Bank’s upper 6% inflation targeting limit during the remainder of this year and into next year, we expect another three interest rate cuts of 25 basis points in September, January and March," said Nedbank economist Johannes Khosa.
He warned, however, that the cuts depended on the stability of the rand in coming months.