Food inflation remains key CPI risk - economist
Standard Bank economist Shireen Darmalingam has warned that the price of food remains a key risk to consumer inflation.
She was reacting to the July’s consumer inflation data, which was released on Wednesday.
Annual consumer inflation dipped to its lowest level since July 2021.
After holding steady for ten months in the five to six per cent range, it slowed to 4.6% in July from 5.1% in June.
Lower annual rates were recorded for several product groups, most notably food and non-alcoholic beverages, transport, and housing and utilities.
The annual rate for food and non-alcoholic beverages is at its lowest since September 2020.
Darmalingam says the Reserve Bank’s Monetary Policy Committee will take the latest CPI figures into account before making a decision on the interest rate in September.
"The July CPI data came in below our market expectations. The moderation is partly owing to a decline in fuel prices. Food inflation, which also moderated in July, remains a key forecast risk.
"We maintain our longstanding expectations that the SABS will start to ease money to police to the next MPC meeting, we still foresee 425 basis points interest rate cuts at consecutive meetings, and we concur with the SABS forecast that inflation will turn around the midpoint of the target range of the medium term.”
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