Global Courant
Economists at the Bureau of Economic Research (BER) expect consumer inflation in May to reflect positive news for both food and fuel prices.
In the group’s latest weekly outlook, the BER said that in May, the annual rise in food prices would be dampened by the high base of 2022.
“As a result, while we expect food prices to rise by 0.7% month-on-month, the year-on-year rate should fall to 12%, from nearly 14% in April,” the report said.
A similar downward trend is expected for gasoline, with the BER predicting that the annual increase in the gasoline component will also be depressed by last year’s high base.
“Overall, overall CPI is expected to rise 0.2% month-on-month, with the annual rate of increase slowing to 6.4%, from 6.8% in April,” the BER said.
In May, Stats SA reported a CPI of 6.8%, down 0.3% from the slight unexpected increase in March.
Nedbank also expects comparable figures. In its weekly economic insights report, the major bank said it expects a marginal decline in consumer inflation from 6.8% in April to 6.7% yoy, with prices rising 0.5% month-on-month .
“The acceleration to a much higher level in May last year is likely to contain the annual increase in consumer inflation.”
The bank did note that it still expects there to be significant underlying price pressure. These pressures include a shaky and volatile edge, continued load outages and poor growth prospects for the economy as a whole.
Fortunately for businesses and consumers alike, winter load is lower than originally expected, with the Stage 8 warning nowhere to be seen as the country trudges between suspending outages and walking into Stage 3 or 4.
Revised food inflation expectations should be music to the ears of consumers, who have been forced to spend well above the standard price of goods as food inflation stubbornly lurks at a 14-year high of 14%. 13.9% in April.
Gasoline prices have remained flat and are expected to remain so, barring significant movements in the rand/dollar exchange rate or global oil prices.
Taking into account mid-month forecast data from the Central Energy Fund, Gasoline 95 can be expected to drop 4 cents per litre, while Diesel 0.005% will show no change.
The rand has also shown positive signs. Nedbank said the rand continued its recovery last week, breaking through R18.20/$ for the first time since the third week of April.
“Part of the lift came from last week’s positive momentum. The local unit was further bolstered by indications that the blackout this winter is likely to be less severe than initially feared, the US Federal Reserve’s pause and expectations that the diplomatic efforts of President Ramaphosa and other African presidents would help ease geopolitical tensions ”, Nedbank said. .
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