June inflation reaches Reserve Bank target

South Africa’s annual consumer price inflation (CPI) cooled in June, continuing its downward trend in recent months.

StatsSA announced today that annual CPI was 5.4% in June 2023, significantly down from the 6.3% recorded in May 2023. This is the lowest inflation the country has seen since October 2021.

This is the first time the inflation has been in the South African Reserve Bank’s target range of 3% to 6% since April 2022.

According to StatsSA, the consumer price index increased by 0.2% in June 2023.

The main contributors to the 5.4% annual inflation rate were:

• Food and non-alcoholic beverages increased by 11.0% year-on-year and contributed 1.9 percentage points;
• Housing and utilities increased by 4.2% year-on-year and contributed 1.0 percentage point;
• Miscellaneous goods and services increased by 6.4% year-on-year and contributed 0.9 of a percentage point.

In June, the annual inflation rate of goods was 6.3%, down from 8.0% in May. For services, it was 4.5%, a decline from 4.6% in May.

This data will inform the Monetary Policy Committee’s interest rate decision tomorrow.

Despite positive inflation data, experts predict that the South African Reserve Bank will remain cautious and hike the rate by another 25 basis points, bringing the repo rate to 8.50%.