Business News: South Africa's Inflation Rate May Not Result in an Interest Hike

Thursday, June 24, 2021 at 12:50 PM by Reeshni Chetty

The country's inflation rate has increased to reach a 30-month high, however, the possibility of an interest rate hike any time soon is still low
In April, the recorded consumer price was 4.4%, which rose to 5.2% by May, almost a year before it should have reached that point
The aforementioned consumer price matched the estimates made by 15 economists some time ago and is above the 4.5% midpoint

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The increase in the country's inflation rate to a 30-month high is not likely to bring any interest rate hike forward due to the central bank forecasting a second-quarter price growth spike.

The consumer price rose by 5.2% in May after an entire year before it should have, in comparison with the 4.4% recorded in April. This is according to a statement by Statistics South Africa on its website.

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This matched the median of the estimates given by 15 economists and was above the midpoint of 4.5% from the central bank's target range for the first time in around 15 months.

Business News, South Africa, inflation rate, interest hike not likely — South Africa's inflation rate will most likely not result in an interest hike due to the central bank's prediction. Image: Waldo Swiegers / Bloomberg
Source: Getty Images

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BusinessTech reported that the quarterly projection model from the Reser Bank in May showed at the time that inflation would reach around 4.5% if the monetary policy committee anchors the price growth in the second and fourth quarters.

Africa economist at Bloomberg, Boingotlo Gasealahwe, stated that the predicted inflation outlook helps their expectation that the central bank will keep rates unchanged throughout the year. This is due to an improved recovery, which may bring about an increase by the fourth quarter.

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