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July inflation rate falls to lowest in 2016

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Cape Town - Statistics South Africa on Wednesday announced that the country's consumer price index (CPI) was 6.0% in July 2016, down from 6.30% in June. The index increased by 0.8% month-on-month (m/m) in July 2016. This is the lowest the CPI has been this year.

“An improved inflation profile and a stable rand exchange rate would strengthen the argument for no further interest-rate hikes in this tightening cycle,” Kamilla Kaplan, an economist at Investec in Johannesburg, told Bloomberg in an e-mailed note to clients before release of the data. This is particularly “as economic growth prospects remain poor and downside risks persist.”

The MPC, which left borrowing costs unchanged at its past two meetings, forecasts inflation will peak at 7.1 percent in the last quarter of the year.

Housing and utilities decreased from 1.6 percentage points in June to 1.4 percentage points in July. The index increased by 5.8% year-on-year (y/y).

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