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South Africa CPI (May)

South African inflation plunged to 2.1% y/y in May, which probably takes it near the trough. But even as price pressures start to pick up, the headline rate will remain very subdued, allowing the Reserve Bank to continue easing. We think that policymakers will cut the repo rate by a further 75bp, to 3.00%, in the coming months while markets expect only a 25bp cut to 3.50%.
Virag Forizs Emerging Markets Economist
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Africa Economics Update

CBN finally steps up to curb inflation

The Central Bank of Nigeria delivered a surprise 150bp interest rate hike, to 13.00%, today amid mounting inflation and balance of payments concerns. We expect rates to be raised by another 100bp, to 14.00%, in July but further tightening seems unlikely especially as the 2023 elections come into view.

24 May 2022

Africa Data Response

Nigeria GDP (Q1)

Nigeria’s GDP growth slowed to 3.1% y/y in Q1 as robust growth in the non-oil sector was more than offset by a slump in the oil sector. Looser fiscal policy ahead of elections in early 2023 will provide some support to activity going forward, but continued weakness in oil production and disruptions caused by draconian FX policies underpin our below-consensus forecast for growth of 2.3% over 2022 as a whole.

23 May 2022

Africa Economics Weekly

Markets and monetary policy, mounting pressure on naira

Recent investor risk-off sentiment has pushed up sovereign dollar bond yields across Sub-Saharan Africa, fuelling debt risks further, and has put currencies under pressure. Central banks appear to be taking note, with some policymakers turning tightening cycles up a notch. In Nigeria, the recent weakness of the currency on the black market was attributed to election-related spending, but the bigger issue is that downward pressure on the naira stems from the central bank’s unorthodox FX policies.

20 May 2022

More from Virag Forizs

Africa Data Response

Nigeria Consumer Prices (May)

The second consecutive drop in Nigeria’s headline inflation rate, to 17.9% y/y in May, will probably go some way towards easing policymakers’ recent concerns about high and rising inflation. While we expect inflation to remain well above the central bank’s target for the foreseeable future, the MPC is likely to keep interest rates unchanged over the coming years.

15 June 2021

Africa Economics Focus

The perils of deficit monetisation in Nigeria

Nigeria’s government has turned to the central bank to plug ever larger budget deficits in recent years and policymakers are unlikely to kick their deficit monetisation habit, particularly if the fiscal position worsens next year (as we expect). This will deepen some of Nigeria’s existing economic woes, including high inflation, downward pressure on the naira and weak economic growth.

14 June 2021

Africa Economics Weekly

Filling gaps: vaccine supply in SSA & electricity in SA

Leaders of G7 nations meeting this week are ramping up efforts to provide more vaccines to the developing world, which – along with the prospect of larger supplies from China – could give a lift to struggling inoculation campaigns and economic recoveries in Africa. Meanwhile, South Africa announced further steps to address its chronic electricity supply problem that has long weighed on the economy, but the measures will probably take some time to bear fruit.

11 June 2021
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