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The SA Daily 22 May 2019

CPI in target, even if up

Shireen Darmalingam

  • April CPI data by Statistics South Africa is due out today. Bloomberg consensus sees it unchanged at 4.5% y; our forecast however is for an increase to 4.6% y/y due to the sharp fuel price increase in April.
  • Petrol prices rose R1.31/litre at the beginning of April. The Central Energy Fund announced an 82c/l increase in diesel prices too. And, oil prices have thus far in May risen further on flaring tensions in the Middle East and OPEC indicating at the weekend that production cuts would likely continue. Fuel prices will therefore also likely rise in May.
  • Food prices likely rose somewhat in April following several downside surprises recently.
  • The South African Reserve Bank’s Monetary Policy Committee will meet tomorrow, and will likely keep the repo at 6.75%. Markets will watch the statement for clues on changes to the bank’s economic growth and inflation trajectories.
  • A marginal increase in CPI inflation, per our expectation, is unlikely to influence the interest rate decision tomorrow.
  • Being more constructive than the market about medium-term inflation, we expect inflation to average 4.7% this year and next.

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