South Africa Consumer Prices (Dec.)

South Africa’s inflation rate rose to a stronger-than-expected 5.9% y/y in December, probably tilting the Reserve Bank more in favour of continuing to tighten monetary policy. But with soft core price pressures and an Omicron-driven virus wave clouding the recovery, this month’s decision is likely to be a close call. Further out, we think that interest rates will rise more slowly than investors currently expect.