Despite the latest decline in CPI, inflation remains tilted to the upside, with the effects of the politics-driven weakening rand still to be felt in the next quarters. Does SA's government have the political will to self-correct?
Things are going to get a lot worse before they get better, with load shedding destroying the economy and driving inflation in SA. slowed to its lowest level in nearly 12 months, falling to 6.8% in April from 7.1% in March.
It added that on average vegetable prices reached a 15 year high after rising by 23.1% year-on-year in April. “We do think over the next two months or so that food price inflation will peak because internationally wheat and maize prices have started coming down. But there is usually a lag as new inventories come in that should start curtailing food prices going forward.”
Despite the latest decline in CPI the outlook to inflation remains tilted to the upside with the effects of the weak currency still to be felt in the next quarters. The ZAR weakened to a new level above R19 to the USD because of mainly politics. She added that the deceleration in CPI forecast in the second half of the year will be slowed by load shedding which is inflationary coupled with the weaker rand. The central bank estimates that load-shedding will add 0.5 percentage points to headline inflation in 2023.
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