Positive inflation surprise raises hope of a rate cut
Consumer inflation slowed even more than expected — to 4% — thanks mainly to falling food and fuel prices
Consumer inflation slowed to 4% in February — from 4.4% in January, and beating economists’ consensus of 4.2%.
The better than expected inflation figure raises hope that the Reserve Bank’s monetary policy committee will cut interest rates on March 28.
At 4%, inflation is well contained within the Bank’s target range of keeping inflation above 3% but below 6%.
Investec economist Lara Hodes correctly forecast that February’s inflation would moderate to 4%.
"The key influencing factors for the February outcome are expected to be the food and fuel price components. Fuel price pressures subsided in February, with petrol and diesel prices dipping by 30c and 17c a litre respectively," she said.
The fuel component of the consumer price index (CPI) fell 1.8% from January to February.
Statistics SA reported on Tuesday that the CPI rose to 105.8 points in February from 105 points in January. The index was set to 100 points in December 2016.
Bread and cereal prices fell 5.1% in February from the same month in 2017, according to Stats SA.
Other components of CPI to register deflation were fruit, which fell on average by 4.3%; oils and fats, which fell 2.7%; furniture, which became 4.1% cheaper over the year; and appliances, which fell 2.1%.
Meat was 11.4% more expensive than a year ago,