National inflation at 10-year low, city’s stays steady

2010-09-30 00:00

CONSUMER inflation has hit itslowest level in more than a decade.

Inflation has slowed significantly in 2010 when one compares the consumer price index (CPI) to the high levels of the 2008-2009 period — and the good news for consumers is that experts expect CPI to remain stable in the short term.

This is despite worryingly high administered prices, most notably the recent electricity price hikes.

The major contributor to the national figure remains housing and utilities.

CPI for administered prices in August 2010 was well above the overall figure, at 8,6%.

Administered prices are the prices of goods and services provided by entities owned by the Government.

The latest CPI figure released yesterday was 3,5% in August 2010, compared with 3,7% in July 2010.

Consumer inflation in Pietermaritzburg was steady at 3,7% in August 2010 from 3,6% in July 2010 — a far cry from the 16,8% recorded in August 2008.

Food and non-alcoholic beverage-inflation was muted at 1,9% in Pietermaritzburg in August 2010.

André Roux, head of fixed income, Investec Asset Management believes that inflation could break through the 3% mark if the Rand maintains its recent strength — opening up the possibility of another interest rate cut.

This mark is significant as it is the bottom end of the Reserve Bank’s 3-6% inflation targeting range.

However, Standard Bank economist Shireen Darmalingam does not expect the Reserve Bank to cut interest rates again during the current cycle.


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