Lower oil price, costlier power will work on inflation this year
While rates are expected to remain the same, high fuel prices will ensure consumers pockets remain tight
The South African Reserve Bank (SARB) is expected to keep rates on hold this week after the fuel price fell in December, giving consumers a temporary reprieve. But the relief could be short-lived, with electricity prices set to rise sharply this year. Lower fuel prices, which dropped again this month, helped to moderate inflation in December, with the outlook for inflation now remaining tame for the rest of the year. Fuel prices fell as the international oil price plunged to its lowest levels in more than a year. Crude oil averaged $56.55 in December after breaching $80 earlier last year. Absa economist Miyelani Maluleke said this week: "We expect the SARB to hold, given the sharp drop in Brent crude oil prices and the well-behaved exchange rate."The volatile rand strengthened slightly this month on improved global appetite for riskier assets and short-lived dollar weakness. But while lower fuel prices may have tempered inflation, it is expected to deviate slightly from the mid...
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