Picture: REUTERS
Picture: REUTERS

How South African consumers are struggling will be in focus on Wednesday, with results from furniture retailer Lewis and fast food franchiser Taste, along with Stats SA’s monthly consumer price index (CPI).

The CPI release for October at 10am will provide a clue as to the likelihood of Reserve Bank governor Lesetja Kganyago announcing an interest rate increase at 3pm on Thursday.

It will reveal the inflationary effect of October’s R1/l petrol and R1.24/l diesel price increases.

The consensus of a poll of economists done by Trading Economics is inflation, as measured by the annual change in CPI, will have accelerated to about 5.1% from September’s 4.9%.

Although inflation remains well under the Reserve Bank’s 6% ceiling, concern that inflation will continue rising may prompt the central bank to raise its repo rate from 6.5% to 6.75%.

South African banks by convention add 350 basis points to the central bank’s repo rate to set the prime rate they charge on home, car and other loans.

Asian markets continued sliding on Tuesday, but Naspers’s main asset, Tencent, was up 2% to HK$287.20, raising the hope the top 40 index’s largest constituent will rebound from Tuesday’s 7.35% crash to R2,617.37.

The top 40’s second-largest constituent, BHP, however, was down 3.27% to A$31.62 ahead of the JSE’s opening.

The rand was trading at R14.09/$, R16.02/€ and R18.02/£ at 6.50am, relatively unchanged from Tuesday’s levels.

Taste issued a trading update on Monday saying it expected its interim headline loss per share to halve to about 8c from the loss reported in the first half of its 2017 financial year.

The group has battled to recoup its investment in securing the local rights to US chains Starbucks and Domino’s.

Lewis has not issued a trading statement, indicating its interim earnings will be within 20% of the matching period’s.

Members of the HCI family are in the process of releasing results this week. Tsogo Sun released its results at 5.30pm on Tuesday, and Nivius — now a property company after selling its gambling businesses to Tsogo — issued a trading statement on Tuesday saying it expected to report on Wednesday that it fell into an interim headline loss per share of about 21c from headline earnings per share (HEPS) of 116c in the matching period.

Hospitality Property Fund, which is also part of the HCI stable after exchanging hotels with Tsogo, may also release its interim results on Wednesday. 

laingr@businesslive.co.za