South Africa’s CPI declines to 4.6 percent in July

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A discount sign is seen at a mall in Johannesburg, South Africa, March 10, 2021. South Africa's gross domestic product (GDP) recorded a 1.5 percent growth in the fourth quarter of 2020, and expanded 6.3 percent quarter on quarter on a seasonally adjusted and annualized basis in the same quarter, Statistics South Africa (Stats SA) data showed on Tuesday. Manufacturing and trade has helped lift growth in the fourth quarter, according to the Stats SA. However, the positive growth recorded in the third and fourth quarters was not enough to offset the devastating impact of COVID-19 in the second quarter when lockdown restrictions were at their most stringent, it said, adding that economic activity for 2020 decreased by 7 percent compared to 2019. (Xinhua/Chen Cheng)
A discount sign is seen at a mall in Johannesburg, South Africa, March 10, 2021. South Africa's gross domestic product (GDP) recorded a 1.5 percent growth in the fourth quarter of 2020, and expanded 6.3 percent quarter on quarter on a seasonally adjusted and annualized basis in the same quarter, Statistics South Africa (Stats SA) data showed on Tuesday. Manufacturing and trade has helped lift growth in the fourth quarter, according to the Stats SA. However, the positive growth recorded in the third and fourth quarters was not enough to offset the devastating impact of COVID-19 in the second quarter when lockdown restrictions were at their most stringent, it said, adding that economic activity for 2020 decreased by 7 percent compared to 2019. (Xinhua/Chen Cheng)

The country’s consumer price inflation (CPI) for July slowed to 4.6 percent year on year in July, down from 4.9 percent in the previous month, according to the figures released by Statistics South Africa (Stats SA) on Wednesday

Chief Director for Price Statistics Patrick Kelly said that food prices, housing and transport contributed to July’s inflation.

He said inflation for oils and fat also continued to escalate reaching an annual rate of 22.4 percent which is the highest in almost 10 years. Housing and utilities increased by 3.8 percent year on year, transport rose by 8.0 percent while miscellaneous goods and services went up by 4.2 percent.

Jannie Rossouw, head of School of Economic and Business Sciences at the University of the Witwatersrand, said there would be no need for the Reserve Bank to hike the repo rate if the inflation continued declining in the next coming months.

“If we can stabilize the inflation, the repo rate would remain the same,” he said.

In July, the repo rate remained unchanged at 3.5 percent with the prime lending rate at 7 percent.

Rossouw said the 4.6 percent was close to the “mid-point of the target range.” He said that an increase in the repo rate would have more impact on poor households as they spent more money on food compared to the middle class. Enditem

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