South Africa: Inflation touches 10-month low in January

Consumer prices fell 0.2% from a month earlier in January, in line with December’s outturn but landing below analysts’ expectations. Sharply lower fuel costs were behind the reading, and more than offset higher food costs. To that effect, core consumer prices—which exclude food and fuel prices—rose 0.2%, down from 0.3% in December.

Inflation dropped to 4.0% (December: 4.5%), falling below the midpoint of the South African Reserve Bank (SARB)’s target band of 3.0%–6.0%. Core inflation was stable from December at 4.4%, while annual average inflation was stable at 4.6%.

South Africa Inflation Forecast

The SARB sees inflation averaging 4.8% in 2019 and 5.3% in 2020. FocusEconomics Consensus Forecast panelists see inflation averaging 5.1% in 2019, which is unchanged from last month’s forecast. The panel projects average inflation at 5.2% in 2020.