Inflation Rate now below SARB Target Corridor at 2.1%

Inflation as measured by the consumer price index (CPI) fell again in May 2020, reflecting the decline in fuel prices as well as the impact on the economy of lockdown measures introduced to curb the spread of Covid-19, notes Novare Investments.

Stats SA showed today that CPI in May slowed to 2.1% year-on-year, from 3.0% in April and 4.1% in March. The fuel index was 25.9% lower than it was in May 2019. On a month-on-month basis, inflation fell 0.6%.

The annual reading for May 2020 is the lowest since September 2004 and means inflation has fallen to below the lower end of the Reserve’s Bank 3% to 6% target corridor that guides interest rate policy. The figure has been at or below 4.5%, the middle of the range, for 18 months.

This might also prompt a further reduction in the interest rates when the Monetary Policy Committee of SARB will meet next week (21 – 23 July).

Stay tuned…. STAY HEALTHY!

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