South African Reserve Bank’s (Sarb) makes a tough decision as regards raising interest rates.
The surge in consumer price inflation (CPI) has left the South African Reserve Bank’s (Sarb) Monetary Policy Committee (MPC) with a tough decision as regards raising interest rates.
Sarb governor Lesetja Kganyago had disclosed earlier that the repo rate will remain unchanged at 3.5% for a while but an increase in the annual CPI to 4.4% in April 2021, from 3.2% in March 2021, might force the MPC to reconsider.
Stats SA says this was an increase of 0.7% month on month in April 2021.
“The main contributors to the 4.4% annual inflation rate were food and non-alcoholic beverages; housing and utilities; transport; and miscellaneous goods and services.”
The statistics agency stated that food and non-alcoholic beverages increased by 6.3% year on year, and contributed 1.1 percentage points to the total CPI annual rate of 4.4%.
Housing and utilities increased by 2.3% year on year and contributed 0.6 of a percentage point. Transport increased by 10.6% year on year and contributed 1.5 percentage points.
Miscellaneous goods and services increased by 4% year on year and contributed 0.7 of a percentage point.
The annual inflation rates for goods and services were 6.4% and 2.7% respectively.
The sudden rise in CPI reverses the downward trend in inflation over the past five years and moves it close to the midpoint of the MPC’s inflation target.
