Consumer inflation slows again, after two months of increases
But with rating downgrades hanging over SA, the Reserve Bank is unlikely to cut rates on Thursday despite the benign inflation environment
Consumer inflation dipped as expected in October, thanks in part to smaller fuel price increases and a continued moderation of food inflation. The consumer price index (CPI) rose 4.8% in October from a year earlier, after an unrevised 5.1% increase in September. The Reserve Bank’s monetary policy committee announces its decision on interest rates on Thursday, when it will detail its outlook for inflation over the medium term. The Bank surprised by not cutting rates at its last meeting in September, and with credit rating downgrades to junk looming for SA — possibly as soon as Friday, when Moody’s and S&P are both expected to announce the results of their reviews — a cut on Thursday is unlikely, even in a benign inflation environment. Investec economist Kamilla Kaplan said on Wednesday that the Bank was "likely to reiterate that the balance of risk to the inflation profile remains to the upside. The risks include the rand exchange rate, the pace of global monetary policy normalisatio...
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