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Consumer inflation eases slightly in August thanks to a lower oil price

by , 23 September 2015

Earlier today, Stats SA released its consumer inflation data for last month. The consumer price index (CPI) showed that inflation eased slightly on an annual basis.

The upward pressures on inflation have subsided thanks to a lower oil price, which led to lower fuel prices.

Let's take a closer look at what the data revealed…

Consumer inflation comes in at 4.6% for August

Consumer inflation eased more than economists’ forecast to “4.6% year-on-year,” reports IOL. This brings it down 0.4% from the 5% reported for July.

Economists’ expected inflation to come in at 4.7% for August, notes BDLive.

Looking at the data on a month-on-month basis, there was no change, says Fin24. The announcement also took pressure off the Reserve Bank’s monetary policy committee’s decision over whether to hike interest rates or not.

The governor of the Reserve Bank announced this afternoon that interest rates would remain unchanged for the moment.

The major factor leading to a drop in inflation was “negative growth in transport inflation due to the weak oil price,” reports the SABC. This led to the price of petrol and diesel falling.

At the beginning of August, petrol prices fell 51c. And the impact of lower fuel prices could be evident this month on inflation as petrol prices fell a further 69c.

This keeps inflation within the Reserve Bank’s target range of between 3% and 6%.

The upward pressure on consumer inflation remains a worry

The Inflation Factory points out that “this is the first monthly decrease in year on year inflation,” after five consecutive months of rising, says Fin24. But it warns projections show the year on year rate will keep increasing until the start of the New Year, “with a strong change of breaching” the top end of the central bank’s target in the first few months of the year.

So good news for now on the inflation front. But with the rand trending sharply weaker, inflation may start to reflect this.

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Consumer inflation eases slightly in August thanks to a lower oil price
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