South Africa’s inflation cools amid falling fuel prices

South Africa’s inflation rate slowed amid a sharp decline in fuel prices although other categories remained elevated, sending mixed signals to the central bank, which has cautioned it remains wary of ongoing cost pressures.

The consumer price index rose 5.5% in November from a year ago after a 5.9% gain in October, Pretoria-based Statistics South Africa said Wednesday in a statement.

That was slightly above the 5.4% median of 16 economists’ estimates in a Bloomberg survey.

The latest reading sets inflation nearer to the midpoint of the central bank’s 3%-to-6% target band, where it prefers to anchor price growth expectations.

Policymakers have held their benchmark rate at a 14-year high of 8.25% since May. But tamer readings on inflation – if sustained could encourage them to consider rate cuts in 2024.

Investors, prior to the release of the inflation data, had a tiny lean toward the Reserve Bank beginning to cut interest rates as soon as March, with a quarter-point reduction fully priced for its May meeting.