South Africa’s inflation hits four-year low

South Africa’s inflation rate declined to a more than four-year low, heralding another reduction in borrowing costs on Thursday. 

Consumer prices rose 2.8% in October from a year earlier, compared with 3.8% in the prior month, Pretoria-based Statistics South Africa said Wednesday in a statement on its website. That was slower than the 3% median estimate of 15 economists in a Bloomberg survey.

The slowdown to below the lower end of the central bank’s 3% to 6% target range will likely persuade its monetary policy committee to ease monetary policy for the second time in as many months.

All 20 economists polled in a separate Bloomberg survey expect the MPC to cut the benchmark rate by a quarter-point to 7.75% on Thursday.

Still, Governor Lesetja Kganyago will probably reiterate that future decisions will be data dependent with new inflation risks emerging.

The rand has depreciated almost 3% against the dollar since Donald Trump won the US election.

The currency has also been undermined by risk-off sentiment toward emerging market assets after Russia’s war with Ukraine entered a dangerous new phase this week when Ukrainian forces carried out their first strike on a border region in Russia using Western-supplied missiles.