Consumer inflation slowed in November, hitting the lowest levels since December 2010, Stats SA said on Wednesday.

Annual growth in consumer prices, as measured by the change in the consumer price index (CPI), slowed to 3.6% in November, down from 3.7% in October.

“Since the end of 2016, inflation has been on a downward trend, and has remained firmly within the SA Reserve Bank’s 3%-6% monetary policy range since April 2017,” the agency said.

The last time inflation was this low was when it hit 3.5% in December 2010.

The pace of the slowdown was in line with market expectations, with a Bloomberg poll of economists predicting inflation would slow to 3.6%. 

With November’s print, consumer inflation has also stayed at or below the 4.5% midpoint of the Bank’s target range for the whole of 2019.

Despite the easing inflationary environment and what some economists saw as a chance to cut interest rates, the Reserve Bank maintained the repo rate at 6.5% after its last monetary policy committee meeting in November.

The Bank has faced criticism for not cutting rates to boost economic growth, which contracted 0.6% in the third quarter.

But mounting worry over the government’s weak fiscal position, and the fear that Moody’s Investors Services will cut SA’s remaining investment-grade rating in early 2020, have stayed its hand.

Fuel prices were a key reason for the November slowdown.

According to the agency, the transport category moved into deflationary territory in November, showing an average annual price decrease of 0.3%.

A drop in the price of inland 95-octane petrol of 13c/l between October and November contributed to this decrease, it said, bringing the annual decline for the year to R1.

Core inflation — measured by excluding food and fuel prices — was 3.9%, coming in slightly higher than estimates of 3.8 basis. Inflation accelerated 0.1% month on month

The main contributors to the 3,6% annual inflation rate were food and nonalcoholic beverages; housing and utilities; and miscellaneous goods and services, Statistics SA said.

Food and nonalcoholic beverages increased 3.5% year on year, and contributed 0.6 of a percentage point to the total CPI annual rate of 3.6%, Statistics SA said, while housing and utilities increased 4.8% year on year.


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