Fuel price cuts helped inflation slow more than expected in January. Picture: ISTOCK
Fuel price cuts helped inflation slow more than expected in January. Picture: ISTOCK

January’s R1.22/l drop in petrol and R1.54/l drop in diesel helped inflation slow more than expected.

Inflation, as measured by the annual change in the consumer price index (CPI), slowed to 4% in January from 4.5% in December, beating the economists’ consensus that it would slow to about 4.3%.

Inflation was expected to moderate thanks to two months of large fuel price cuts, which took the price of 93 octane petrol in Gauteng from a peak of R16.85/l in October down to R13.79/l in January. In February, the government-set retail price of petrol rose 7c to R13.86/l.

According to Stats SA’s CPI report on Wednesday, fuel was 1.2% cheaper in January than the same month in 2018.

The annual change in CPI is the key measure used by the Reserve Bank’s monetary policy committee to set interest rates. The committee is scheduled to announce its next decision on March 28.

With inflation well within its 3%-6% target range, the committee is unlikely to change interest rates in the near future.

Although overall food inflation was 2.3% in January, Stats SA said vegetable prices showed an alarming annual inflation rate of 11.1% and cold beverages 11.2%.

Households paid 11% more for water and other services.

laingr@businesslive.co.za