Johannesburg, 22 May 2019 – The official inflation number released by Statistics South Africa (Stats SA) today bodes well for businesses and consumers overwhelmed by persistent, recent increases in fuel prices and a depreciating currency which makes imported inputs more expensive, the Steel and Engineering Industries Federation of Southern Africa (SEIFSA) said this morning.
The annual consumer price inflation (CPI) slowed marginally to 4.4 percent in April 2019, from 4.5 percent in March 2019. The month-on-month movement in the consumer price index was 0.6 percent in April 2019.
“Given that the data eased well within the South African Reserve Bank’s (SARB) inflation target band, the downward trajectory is welcome. The release of the CPI data, which comes a day before the SARB is set to make an announcement on interest rates and inflation, will invariably impact on how Monetary Policy Committee (MPC) members may vote,” SEIFSA Economist Marique Kruger said.
She added that the slowdown in the official inflation number bodes well for companies in the Metals and Engineering (M&E) sector in particular and the broader manufacturing sector, as it reduces both operational costs and the cost of goods soldHowever, she warned that increasing input costs may add to high fuel prices which, together with the weaker rand, may impact negatively on business margins.
“It is against the backdrop of continuously rising intermediate input costs that a prudent suggestion is made for the SARB’s MPC to leave interest rates unchanged tomorrow in order to contain business costs and support businesses under duress,” Ms Kruger concluded.