Amidst all negative news, there are few rays of sunshine making the news, like the latest Inflation Rate. April’s inflation has eased to 3%, its lowest level in 15 years according to data released from Stats SA earlier today as the annual consumer price inflation is at its lowest level since June 2005, when the rate was 2.8%.
While analysts had anticipated the inflation rate to be around 3.5% (down from 4.1% in March) the reality was dictated by the “fallout” of the national lockdown in April enforcing reduced consumer demand while increasing pressure on supply chains.
This level might even be here to stay despite looming increases in electricity tariffs because of a low oil price (translating to an expected drop in fuel prices of R 1.88) and expected low increases in the services sector, which both may safeguard the current rate.
The inflation rate is therefore now comfortably at the lower end of SARB’s target corridor of between 3% and 6%, proving the Monetary Policy Committee right when it lowered interest rates and might create room for further rate cuts??