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CPI up to 5%

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The Consumer Price Index (CPI) rose to 5% in July 2015, Statistics South Africa (Stats SA) said on Wednesday.

“The headline CPI annual inflation rate in July 2015 was 5%. This rate was 0.3 of a percentage point higher than the corresponding annual rate of 4.7% in June 2015,” said Stats SA.

According to Stats SA, the food and non-alcoholic beverages index increased by 0.1% between June 2015 and July 2015.

The housing and utilities index increased by 3.1% between June 2015 and July 2015.

The 5% increase in inflation was in line with market expectation.

Nedbank economists said inflation was expected to increase further in the coming months as the effect of the high base lessens and is forecast to end the year around 6 %.

“The biggest risk to the inflation outlook is the exchange rate. The rand has reached a 14-year low against the US dollar and the weakness in the currency is persistent, especially given expectations of the start of monetary tightening in the US in September.

“While the impact on durable goods inflation has been remarkably subdued, the weaker currency will partially reduce any positive impact that will arise from lower oil prices,” said the analysts.

The Reserve Bank recommenced hiking rates at its July meeting, ahead of expectations of rate hikes in the US and despite other commodity market economies cutting rates.

“Given current rand weakness and the likely impact of an expected US interest rate hike in September, a further hike in local rates is probable at the Monetary Policy Committee meeting on 23 September,” said Nedbank economists. – SAnews.gov.za

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Alan Straton

Chief Cook, Bottle Washer and Broom Mechanic at MyPE
Passionate about Port Elizabeth and definitely NOT packing for Perth. Alan's ethos is epitomised in the words of Nelson Mandela; "I have fought against white domination and I have fought against black domination. I have cherished the idea of a democratic and free society. If need be, it is an ideal for which I am prepared to die." See more articles by Alan.