Inflation in April, which is expected to edge higher with the increase in value-added tax (VAT), is likely to inform the Reserve Bank’s interest rate decision this week. On Wednesday Statistics SA will release the consumer price index (CPI) for April. This is the first inflation figure that will reflect the increase in the VAT rate from 14% to 15%, as well as the 72c petrol price hike. Inflation was the lowest in seven years in March, at 3.8% year on year, trumping expectations of a slight increase. FNB expects inflation to increase to 4.8% for April and Investec expects 4.7%. The forecasts are within the Reserve Bank’s 3%-6% target band. On Thursday the Bank’s monetary policy committee (MPC) will announce its interest rate decision. "We don’t believe a one percentage point jump in CPI will be enough to justify an interest rate hike, but we expect the tone of the governor’s speech to turn decidedly hawkish," says FNB chief economist Mamello Matikinca. While the inflation outcomes ar...
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