CPI creeps up to 4.1%
Headline consumer inflation increased slightly to 4.1 % in February, up from 4% at the same time last month.
Economist Francois Stofberg says the marginal increase is good news for consumers’ pockets.
"I think the story behind the inflation is more important, it means that the buying power of your salary isn't deteriorating as fast as it usually was when inflation was higher."
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Stofberg says the low inflation rate is also good news for the government’s debt burden.
"As inflations comes down we expect the long-term repayment or the yields on our government bonds to also start coming down gradually. So now that the Reserve Bank says they are targeting midrange inflation, they're targeting the 4.5% level and that has brought down inflation and the result of that is lower expectant future debt level."
The downside, Stofberg says, is the fact that the economy is not growing.
"The demand is simply not there to push inflation up. Inflation isn't a bad thing necessarily, if it’s high as it was at 6%, but it can be if it’s too low. Too low means there's structural problems with the economy which you are aware about and we are seeing it now."
He believes the biggest danger to consumers is the rising price of oil.
"Luckily, we've seen the rand already depreciate as far as we believe it will and in fact we believe the rand might strengthen a bit so that means petrol prices will remain more or less at these current levels. Just remember we are expecting inflation pressure on the higher taxes that we will be paying. So as a net result we'll probably see inflation creep up a to a level closer to 4.5, it might even reach 4.7% but once again. That's a much better position to be in then we were a couple of years ago."
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