What next for inflation in South Africa?

Weak core inflation is likely to keep the headline rate in South Africa close to the bottom of the Reserve Bank’s 3-6% target range both this year and next. This should allow the central bank to keep interest rates low for longer than markets currently anticipate.
William Jackson Chief Emerging Markets Economist
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More from Africa

Africa Data Response

South Africa Consumer Prices (Sep.)

Although South Africa’s headline inflation rate picked up to 5.0% y/y in September, soft underlying price pressures and a fragile economic recovery mean that policymakers will only normalise monetary policy gradually. By contrast, investors currently appear to expect a relatively aggressive tightening cycle.

20 October 2021

Africa Economics Weekly

FX orthodoxy in Nigeria? Strikes in SA, Ethiopia’s conflict

Comments by Nigeria’s vice president endorsing a more market-based exchange rate regime reflect growing concern about the distortionary effects of the current FX system, but there is no evidence that key officials backing the existing currency arrangements are also shifting tack. In South Africa, ongoing industrial action in the steel industry will probably dampen manufacturing output in Q4, in another hit to the recovery in the sector and the wider economy. Finally, escalating tensions in Ethiopia raise the spectre of more severe strains in the balance of payments.

15 October 2021

Africa Data Response

Nigeria Consumer Prices (Sep.)

The drop in the headline inflation rate in Nigeria, to 16.6% y/y in September, will ease pressure on the central bank to raise rates and allow policymakers to focus on supporting the economic recovery.

15 October 2021

More from William Jackson

Emerging Europe Data Response

Russia Consumer Prices (Jun.)

The further rise in Russian inflation to a stronger-than-expected 6.5% y/y in June means the central bank (CBR) is likely to up the pace of tightening when it meets in a couple of weeks. A 75bp hike (to 6.25%) seems most likely, but the probability of an even larger 100bp hike has risen.

7 July 2021

Emerging Markets Economics Update

EM credit growth: where do the risks lie?

With the (usual) exception of Turkey, the strong rates of credit growth seen in some EMs including Brazil and Korea are unlikely to be sustained as policymakers have already started (or will soon turn to) tightening policy. The bigger concern is the extreme weakness of credit growth in other EMs such as Mexico and the Philippines, which threatens to further hold back economic recoveries.

6 July 2021

Latin America Data Response

Brazil Industrial Production (May)

The 1.4% m/m rise in Brazilian industrial production in May only partially reversed the falls in output in the three preceding months. And while surveys point to a stronger reading in June, the sector was probably a drag on q/q GDP growth over Q2 as a whole.

2 July 2021
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