South Africa's February inflation rate eases to 4 percent

Sean Reid
March 21, 2018

CPI inflation fell from 3.0% in January to 2.7% in February, according to the latest ONS data.

The Office for National Statistics said on Tuesday that the UK's Consumer Prices Index (CPI) inflation rate - the key measure of inflation - was 2.7% in February, down from January's 3% level, and lower than economists' forecasts of 2.8%.

This was the lowest since February 2015, when prices gained 3.9 percent.

This left the consumer price index substantially above the BoE's 2% target and prompted the Bank to raise its interest rate for the first time in a decade during the same month.


The ONS said that a small fall in petrol prices alongside food prices rising more slowly than past year helped pull down inflation, as numerous early 2017 price increases due to the previous depreciation of the pound have started to work through the system.

Sterling's slide since the Brexit vote has ratcheted up the pressure on household spending power, climbing from 0.6 per cent shortly after the European Union referendum result to a near six-year high of 3.1 per cent in November 2017. That should help to ease some of the inflation pressure which has hurt the spending power of many households.

"For the Bank of England, this month's drop in inflation - combined with tepid business activity and the inclement weather this quarter - furthers the case to hold fire on an interest rate rise later this week", he said.

Petrol prices fell on the month and food prices rose more slowly than in February 2017, he said.


Phil Gooding, ONS head of CPI, said: "A small fall in petrol prices alongside food prices rising more slowly than a year ago helped pull down inflation, as numerous early 2017 price increases due to the previous depreciation of the pound have started to work through the system".

ONS figures due to be published on Wednesday are expected to show that pay growth edged up to an annual rate of 2.6 percent in the three months to January. It expects wages to grow more quickly than inflation.

South African inflation eased due to 0.8 percent fall in prices of food and non-alcoholic beverages.

"Whilst we are moving back towards a position where there will be growth in real wages, that is wages adjusted for inflation, any substantial growth in real living standards is still some way off".


"We think that the MPC will refrain from ratcheting up its guidance and won't clearly signal an imminent rate rise in the minutes of Thursday's meeting, prompting markets to reassess their view that the chances of a May rate hike are as high as 80%".

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