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Compiled by the Government Communication and Information System Date: 25 Aug 2010 Title: CPI eases to 3.7% in July -------------------- Pretoria - The Consumer Price Index in July eased to 3.7 percent compared to the 4.2 percent recorded in June, Statistics South Africa said on Wednesday. According to Stats SA, average prices increased by 0.6 percent between June and July. The food and non-alcoholic beverages index increased by 0.3 percent between June 2010 and July 2010 while the housing and utilities index increased by 3.0 percent mainly due to a 16.3 percent increase in electricity and other fuels. The restaurants and hotels index decreased by 3.9 percent between June 2010 and July 2010, mainly due to a 15.4 percent decrease in accommodation (the 15.4 percent decrease excludes educational boarding fees). Market consensus was that inflation would ease to 4 percent. Nedbank expects inflation, its lowest level since July 2006, to remain below 4 percent in the next three months due the strengthening of rand, weak domestic and foreign price pressures as well as moderation in service inflation. "Today's inflation figure strengthens the case for further monetary easing in September. The weaker growth picture, coupled with a subdued inflation outlook and a very strong rand will also weigh strongly on the decision to lower rates one last time this cycle," said the Nedbank group. The bank had predicted that CPI will come in at 3.8 percent. "The figure is certainly below market expectations. Transport costs pulled inflation down because of a reduction in the petrol price. Food prices are also something to watch going forward. I would say we are fairly close to the bottom of the cycle. The numbers reflect weak consumer demand," said Standard Bank senior economist Dr Johan Botha. Commenting on the MPC s' meeting Botha said: "It seems evidence is building up for a cut." The Reserve Bank's Monetary Policy Committee will begin its two-day meeting on rates on 8 September. - BuaNews |
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