CPI falls to 6.4 percent

Tuesday, September 22, 2009

Pretoria - The Consumer Price Index (CPI), used to measure South Africa's inflation, continued on its downward trend in August, falling 6.4 percent, Statistics South Africa (Stats SA) announced on Tuesday.

According to Stats SA, the figure was 0.3 percent lower than the 6.7 percent recorded in July.

Contributing factors to the decline of the CPI figure was the 0.1 percent increase in food and non-alcoholic beverages index between July and August 2009.

The alcoholic beverages and tobacco index increased by 2.5 percent between July and August 2009, while the transport index decreased by 0.2 percent between July and August mainly due to the 21 cents decrease in the petrol price.

According to Nedbank economist Carmen Altenkirch, the CPI figure was in line with market expectations.

"We were expecting it to come in at 6.5 percent. The figure shows that food prices increased following a two month decline, tobacco prices also showed an increase. The good news is the decline in the petrol price," she said.

Standard Bank senior economist, Dr Johan Botha, told BuaNews that they were expecting inflation to come in at 6.3 percent.

Commenting on the deliberations of the Monetary Policy Committee, which is expected to make a decision on interest rates this afternoon, Altenkirch said it was unlikely that the repo rate would be changed.

Currently the repo rate stands at 7 percent.

"Judging by the data, it is unlikely that the MPC will reduce interest rates. However, there is one more cut left in the cycle," she said.

She also predicted that the Producer Price Index (PPI), which is to be released on Wednesday, will fall by 3.5 percent. In July, PPI fell by 3.8 percent year-on-year.