According to the most recent MPC statement of the SA Reserve Bank, risks to the inflation outlook are assessed to the upside. Despite easing of producer price and food inflation, global price inflation remains high. Global oil markets are expected to remain tight, with upside risk to prices. Electricity prices and other administered prices continue to present clear short and medium-term risks. Domestic food price inflation continues to be elevated, and the risk of drier weather conditions in coming months has increased. Load-shedding may additionally have broader price effects on the cost of doing business and the cost of living, in particular as diesel consumption increases. Given sticky petrol and food price inflation, considerable risk still attaches to the forecast for average salaries. Against this backdrop, the MPC decided to increase the repurchase rate by 50 basis points to 8.25% per year, with effect from the 26th of May 2023. The Committee’s decision was unanimous.
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