Lower inflation creates rates dilemma for Reserve Bank
Poor fiscal position, possible ratings downgrade may delay easier credit
A drop in consumer inflation to its lowest level in almost nine years may open the window for the Reserve Bank to surprise financial markets and cut interest rates, providing relief to a struggling economy.
Underscoring weak demand in the domestic economy, the rate of increase in consumer prices, as gauged by the annual change in the consumer price index (CPI), slowed to 3.7% in October, down from 4.1% in September. These levels have not been seen since February 2011, Stats SA said.