Interest rate set to fall

2012-07-19 00:00

THE lower inflation rate released yesterday will add further ammunition for the South African Reserve Bank’s (SARB) monetary policy committee (MPC) to cut the interest rate soon.

Economists said yesterday that although a rate cut is unlikely today, consumers could be in for a 50 basis point (half a percentage point) cut on September 20.

The MPC will make an announcement on the interest rate today, following a three-day meeting.

The Consumer Price Index (CPI) last month came in lower at 5,5%, largely in line with the expectations of leading economists. CPI in May was 5,7% and 6,1% in April.

The CPI in KZN declined to 5,8% last month, from 6,2% in May and 6,6% in April, largely on the back of a decline in the rate of price increases of food and non-alcoholic beverages.

Pietermaritzburg’s CPI was marginally higher at six percent, compared with 5,8% in May 2012 and 5,9% in April 2012.

The CPI in Durban and Pinetown was 5,6% last month, from 5,8% in May and 6,4% in April.

The CPI for food and non-alcoholic beverages in KZN declined significantly for the second month running, coming in at 6,4% from 7,5% in May and 9,1% in April.

A monthly grocery bill amounting to R2 000 in June 2011 would, on average cost about R2 128 in KZN a year later.

A KZN resident’s monthly rent amounting to R3 000 in June 2011 would, on average cost about R3 153 a year later.

Standard Bank economist Shireen Darmalingam expects food and non-alcoholic beverage inflation to continue to decline, ending the year on five percent.

The CPI for food and non-alcoholic beverages in South Africa was 5,9% in June compared with 10,3% in January.

Administered prices in June 2012 remained high at 10,1%. Administered prices are those goods and services provided by entities owned by the government, like electricity tariffs.

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