Inflation to average 5.4% in 2017

Wednesday, October 25, 2017
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Medium Term Budget Policy Statement

South Africa’s inflation is expected to average 5.4% in 2017, stated the Medium Term Budget Policy Statement (MTBPS).

The MTBPS tabled by Finance Minister Malusi Gigaba in Parliament on Wednesday stated that inflation expectations remain near the upper end of the target band (of between 3and 6%).

The mini-budget noted that the inflation outlook has improved since the 2017 Budget.

“Headline inflation is now expected to average 5.4% in 2017, down from 6.4%. The revisions to the inflation outlook reflect lower oil and food prices, and a slightly stronger exchange rate assumption. The risks to the inflation outlook remain currency depreciation, higher oil prices, rising electricity tariffs and further sovereign rating downgrades,” said the MTBPS.

The Consumer price index (CPI) inflation returned to within the target band in the second quarter of 2017. CPI inflation declined from 6.6 % in January to 4.8% in August.

The mini-budget noted that policy and political uncertainty remain central risks to the domestic economic outlook.

“Elevated policy and political uncertainty, coupled with weak confidence, discourage investment and consumption. Further risks include a downgrade of the local currency rating and higher administrative prices, which would lead to higher inflation.” - SAnews.gov.za