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Inflation predicted to drop to 5.8%

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South African consumers can breathe a sigh of relief as the cost of living is likely to drop to moderate levels.

Finance Minister Nhlanhla Nene has projected the Consumer Price Index (CPI) to drop to 5.8% in 2015 – which is within the 3 to 6% target band. But the forecast inflation could change negatively should the Rand depreciate any further.

The Minister made the announcement when he tabled the National Treasury’s Medium Term Budget Policy Statement (MTBPS) in the National Assembly on Wednesday afternoon in Cape Town.

“Over the period ahead, food inflation is expected to recede from current levels thanks to buoyant global and domestic production.

“Together with an expected moderation in global oil prices, these forces should partially off-set increases in electricity prices.

“Headline inflation is expected to return within the target band in the first quarter of 2015, and core inflation is likely to remain close to current levels of 5.8% in 2015,” said Minister Nene.

In August this year, inflation breached the 6% target band after four years when it raised to 6.4%.

This, the Minister said, was caused by a spike in domestic maize and wheat prices and the impact of the weaker rand on petrol prices.

“Monetary policy and subdued demand conditions have helped to keep inflation levels stable.

“In comparison to countries with similar growth rates, however, inflation remains elevated, suggesting stubborn levels of core inflation and structural imbalances in the economy,” he said. – 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.