Economist expects inflation to rise to 3%

Absa Economist Miyelani Maluleke says he expects inflation to rise to 3% in March from 2.9% in February. His comment comes as Statistics South Africa prepares to release the consumer price inflation rate for March later this week.

Maluleke says the anticipated increase in inflation comes from higher fuel prices which came into effect in March due to a rise in the price of Brent Crude oil.

“So, even with the higher inflation, it’s important to know that inflation still remains very much with the Reserve Bank’s target range. These days, it doesn’t look like South Africa will have a big inflation spiral any time soon. We do believe that the South African bank will probably keep interest rates at the current levels throughout this year.”

Consumer inflation slows to 2.9% in February:

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Rand stronger

The rand is trading at stronger levels of R14.23 and could even break the R14 mark on the back of increased global risk appetite and a weaker United States dollar, which has been trading at month-long lows.

The dollar was pushed down by US treasury yields which have been hovering close to their lowest level in five weeks.

Economist at Econometrix Laura Campbell says South Africa’s exchange rate tends to be dominated more by international factors than domestic factors.

“So, we’ve seen that the rand has been strong in recent days and we saw it strengthening today. As is the case with South Africa’s exchange rate, it tends to be dominated more by international factors more than by domestic factors. So, a current risk on sentiment is driving investment into emerging markets such as the rand exchange rate which are seen as riskier assets to hold.”

Source: SABC News (sabcnews.com)