Johannesburg, 23 May 2018 – The official inflation number released by Statistics South Africa (Stats SA) does not augur well for businesses and consumers overwhelmed with the recent increases in oil and petrol prices, a depreciating exchange rate and an increase in VAT, Steel and Engineering Industries Federation of Southern Africa (SEIFSA) Economist Marique Kruger said this afternoon.
The timing of the release comes just one day before the South African Reserve Bank (SARB) is set to make an announcement on its interest rate and it may have an impact on the final decision. The annual consumer price inflation (CPI) increased from 3.8% in March 2018 to 4.5% in April 2018. The month-on-month movement in the consumer price index increased by 0.8% in April 2018.
Ms Kruger said: “High petrol prices and the weaker rand will negatively impact on the ease of doing business for companies in the Metals and Engineering (M&E) sector in particular and does not bode well for the broader manufacturing sector. Moreover, over-indebted consumers will have to carry the burden of a consumption tax and an increase in transportation costs, resulting in a possible reduction in demand”.
Ms Kruger added that the rise in inflation is a concern for the M&E sector because, notwithstanding the improvement in business and consumer confidence, the higher petrol price and the volatile exchange rate could contribute to higher inflation in the coming months, thus invariably affecting export competitiveness.
Issued by:
Ollie Madlala
Communications Consultant
Tel: (011) 298 9411 / 082 602 1725
Email: ollie@seifsa.co.za
Web: www.seifsa.co.za