SA food inflation slump, Ethiopia FX, Zambia election

The fall in South African inflation in July is likely to be followed by a pick-up in the coming months due to unfavourable base effects. But underlying inflation pressures, as well as food inflation, are soft and we think there will be little pressure on the SARB to hike rates again. Elsewhere, Ethiopia’s firm grip on the birr is putting its already low FX reserves under pressure. For relief, a modest devaluation is needed, If resisted by policymakers, the eventual adjustment could become disorderly.