S.Africa records lowest inflation in 16 years

South Africa’s annual Consumer Price Index (CPI) for 2020 was at 3.3 percent which was the lowest inflation recorded since 2004, Statistics South Africa (Stats SA) has said.

Stats SA attributed food and non-alcoholic beverages as the main drivers of inflation in December with a monthly increase of 0.5 percent and an annual rise of 6.0 percent. This was up from November’s annual reading of 5.8 percent.

“Meat prices rose by 7.3 percent from a year ago and by 1.2 percent from November. Stewing beef was 2.9 percent more expensive than it was in November 2020 and 12.4 percent more expensive than in December 2019,” data released Wednesday by Stats SA showed.

Prices in the oils and fats category climbed by 10.2 percent over 12 months and by 1.6 percent over one month. Cooking oil prices increased by 11.3 percent since December 2019 and by 2.9 percent between November 2020 and December 2020.

With the Reserve Bank set to announce its decision on interest rate on Thursday this week, it’s unclear if the low inflation would sway the monetary policy committee’s final decision.

“The Reserve bank looks at future inflation, so if inflation is low and supported and is expected to stay low, it might have a bearing on the Reserve Bank decision, however if there’s an expectation that inflation will accelerate in months to come, they will not change the interest rate,” Jannie Rossouw, Head of School of Economic and Business Sciences at the University of the Witwatersrand, told Xinhua.