By Rivaldo Jantjies.
South African annual inflation accelerated on the eve of a widely expected interest-rate cut.
Consumer prices rose 3.6%, compared with 3.4% in September, Pretoria-based Statistics South Africa said in a statement on its website on Wednesday. The median estimate of 14 economists in a Bloomberg survey was 3.7%.
Most economists in a separate Bloomberg survey conducted before Wednesday’s data release predict the central bank’s monetary policy committee will resume its easing cycle, after South Africa’s National Treasury last week formally adopted the monetary authority’s new 3% inflation target in its medium-term budget.
The MPC’s previous 3%-to-6% target range had been in place for a quarter of a century.
Treasury’s endorsement gives “strength to the signal” that the country is moving toward a lower inflation norm, Keabetswe Mojapelo, macroeconomist at Rand Merchant Bank, said before Wednesday’s data. “That alignment should help guide expectations down over time and increase the likelihood of a 25 basis-point cut “this week to 6.75%, he said.
Finance Minister Enoch Godongwana said last week “the new target will anchor inflation at permanently lower levels,” and “reduce the cost of living and borrowing costs.”