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Economy

SA inflation slows, no rate cut seen in election week

Date: May 22, 2024

South Africa's (SA) headline inflation slowed slightly in April, but analysts said an interest rate cut was unlikely next week when the Reserve Bank's monetary policy meeting overlaps with a national election whose outcome is uncertain.

Headline consumer inflation dropped to 5.2% year on year in April from 5.3% in March, Statistics SA data showed on Wednesday, whereas economists polled by Reuters had predicted another reading of 5.3%.

The slowdown was driven by a decrease in annual inflation for food and non-alcoholic beverages, offsetting fuel price increases.

The SA Reserve Bank has tried to steer inflation back to the midpoint of its target band of between 3% and 6% by keeping its main interest rate at its highest level since 2009 for the past year.

Its next policy announcement is scheduled for May 30, the day after South Africans vote in national and provincial elections, and the central bank governor told Reuters last month that huge uncertainty over the results was keeping the country's risk premium elevated.

--Reuters--