Mudiwa Gavaza is joined by Jeffrey Schultz, senior economist at BNP Paribas SA
Soaring inflation, cost pressures and dwindling economic prospects for consumers, business and government, are the focus of this edition of the Business Day Spotlight. This week, Stats SA reported that the consumer price index rose 6.5% in May, breaching the Reserve Bank’s upper limit of 6%. This is the highest reading since January 2017, when the inflation rate was 6.6%, and well above market expectations of 6.2%.
Annual core inflation, which excludes prices of food, nonalcoholic beverages, fuel and energy, quickened to 4.1% in May, the highest since August 2019, from 3.9% the previous month, Stats SA said.Earlier in June, BNP Paribas expected a 50 bps pace of hikes for the Reserve Bank’s three remaining meetings in 2022.
In light of this week’s inflation numbers, Schultz says “We now expect the SARB to have a 75bp pace of hikes as inflation proves more persistent alongside a smaller output gap”. Topics of discussion include: the latest CPI figures for SA, reasons for the continued increase in living costs, ways in which governments and central banks around the world can work to stem the economic bleed, and rethinking globalisation.
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