Easing inflation brings relief for consumers, says Jammine
South Africa’s headline consumer inflation eased to 2.7% in March — the lowest in five years — thanks to declining fuel prices and lower tuition-related costs, Statistics South Africa confirmed on Wednesday.
Chief Economist at Econometrix, Azar Jammine, says the drop in the Consumer Price Index (CPI) was steeper than expected and brings welcome relief for consumers.
"It does create the opportunity for consumers to feel that their salaries are well in excess of inflation, and that should be of assistance to consumer spending.
"The decline in the CPI inflation rate was considerably greater than what had been expected. I think consensus was for the CPI inflation rate to decline from 3.1% to 3.0%. Instead, it declined to 2.7%, which was the lowest reading for inflation since the COVID crisis."
The biggest contributors to the slowdown in inflation were moderated fuel costs and lower food prices, which have helped ease pressure on household budgets.
Jammine noted that the drop in inflation could pave the way for interest rate cuts, though not immediately, as uncertainty persists in the global economy.
"In the present environment in which there is so much uncertainty around the tariff situation and the flip-flops being undertaken by the U.S. authorities regarding the tariffs that they are imposing, the Reserve Bank is still likely to hold off cutting interest rates anytime soon. But it does suggest that the base from which inflation may rise later in the year is that much lower, which will enhance the ability to cut interest rates further later in the year".
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