The latest inflation data has fuelled hopes for an interest rate cut in September despite rising producer prices for maize.
Consumer price inflation CPI slowed to its lowest level this year dropping to 5.1 in June down from 5.2 in May. According to data released by Stats SA, food and non-alcoholic beverages contributed to the decline, edging lower to 4.6 last month after stalling at 4.7 in May and April.
Junes inflation rate is slightly lower than what some economists had predicted but aligns with the consensus expectation.
Standard Bank Group Head of South Africa Macroeconomic Research Dr. Elna Moolman says the data is very encouraging as it shows that both headline and core inflation, as well as, rental inflation remain quite subdued.
"In other words, this data set confirms a lack of demand-driven inflation, which is an important consideration when the Reserve Bank decides on the interest rate path. This data is therefore providing some support for our long-standing view that the Reserve Bank will likely start to ease monetary policy reasonably soon.
