According to the most recent MPC statement of the SA Reserve Bank, risks to the inflation outlook are assessed to the upside. Despite some easing of global producer price and food inflation, global price levels remain elevated and Russia’s war in the Ukraine continues. The oil market is expected to remain tight, particularly as China’s economy rebounds. Electricity price inflation has shifted significantly higher this year and next and other administered prices continue to present clear medium-term risks. Domestic food price inflation continues to surprise higher and may again. Load-shedding may have broader price effects on the cost of doing business and the cost of living. Given sticky petrol and food price inflation, considerable risk still attaches to the forecast for average salaries and hence for the trajectory of core inflation. Against this backdrop, the MPC decided to increase the repurchase rate by 25 basis points to 7.25% per year
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