Consumer price inflation is expected to have bridged 7% when Statistics SA releases its figures for last month on Wednesday. | City_Press
In May, CPI surged to 6.5%, overshooting the Reserve Bank’s target range of between 3% and 6% with the sweet spot for inflation being 4.5%.
“Not surprisingly, wage demands are increasing amid rising inflation expectations, which should be reflected in upcoming inflation expectation surveys. These are the channels through which food and fuel price increases feed through into core inflation.”Kamp said South Africans were not only battered by supply side shocks as a result of the war between Ukraine and Russia, but also by a weakened rand, which is feeding into inflation.
Moody’s Investors Service predicted that the country’s inflation rate would peak at around 8% this year. The Reserve Bank’s had revised higher its headline inflation forecast for this year to 5.9% due to increased prices in food and fuel prices.Food and fuel prices were the main drivers of headline inflation over the last few months. Food prices were expected to remain elevated for this year, while fuel price inflation was expected to ease next year.
He explained that the boom in coal prices has not been able to aid the local currency as other minerals such as the platinum group metals did not perform as expected. He added that the Reserve Bank still had room to hike rates as the repo rate was still well below its neutral level and must be expected to continue increasing.
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