Latest news with #SouthAfricanReserveBank
IOL News
8 hours ago
- Business
- IOL News
This is what June's inflation results mean for your pocket and trolley
June's inflation data revealed a rise to 3.0%, up from 2.8% in April and May, signalling a shift that could hit both consumers and portfolios. While fuel prices are easing, grocery bills are climbing fast, with food inflation at a 15-month high of 5.1%. Image: Squirrel photos/Pixabay After maintaining stability at 2.8% in April and May, South African inflation experienced a notable rise in June, aligning with projections from economists and signalling new considerations for the SA Reserve Bank ahead of its upcoming interest rate review. What does it mean? Your grocery basket is more expensive – Meat, fruit, and vegetables are driving food inflation – Meat, fruit, and vegetables are driving food inflation Fuel relief is real – but might not last – Prices are down now, but oil market risks loom – Prices are down now, but oil market risks loom Interest rate outlook in question – SARB's next move could affect loan repayments, mortgages, and household budgets – SARB's next move could affect loan repayments, mortgages, and household budgets Trade wars and tariffs could make things worse – Global instability could hit SA's agricultural and automotive sectors The annual consumer price inflation recorded a 3.0% increase, while the Consumer Price Index (CPI) rose by 0.3% month-on-month, reflecting the complex dynamics within the nation's economy. Despite remaining close to the lower threshold of the South African Reserve Bank's (SARB) inflation target range of 3% to 6%, the increased rate raises concerns. The heightened inflation is now driven primarily by the food and non-alcoholic beverages sector, which saw its annual rate soar to a 15-month high of 5.1% in June. Within this category, meat, particularly beef, emerged as a significant contributor to the food inflation spike, alongside other unprocessed food items. This upward trend is compounded by fruits and nuts, and vegetables maintaining double-digit inflation rates for the second consecutive month. Interestingly, while food costs escalated, fuel prices have continued their decline, marking a fourth month of reduced prices. The cost of fuel is currently on average 11.2% lower than it was a year ago, providing some respite amid rising food costs. Delving deeper, the annual inflation rate for goods surged to 2.3%, an increase from 1.8% in May, whereas the service sector received a slight boost as its inflation rose to 3.7% from 3.6% the previous month. South African Reserve Bank chief Lesetja Kganyago has expressed concerns regarding external factors, most notably the depreciation of the US dollar due to potential tariffs and deflationary pressures emanating from China. These challenges pose significant risks to the local inflation landscape and broader economic activity. Kganyago highlighted that if tariffs are imposed, sectors such as agriculture and automotive could suffer, further stressing South Africa's economic framework. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. 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Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Next Stay Close ✕ The prevailing uncertainty in the economic landscape has resulted in mixed expectations among economists concerning the decisions of South Africa's Monetary Policy Committee (MPC) during its upcoming rate-setting meeting. Earlier this year, the bank has already implemented two cuts to the repo rate, the latest occurring in May. While some analysts advocate for the continuation of this easing cycle, arguing that inflation has remained consistently low, others believe the committee may choose to maintain the current rates in light of potential volatility. IOL
IOL News
16 hours ago
- Business
- IOL News
South Africa's economic growth outlook: What to expect in the coming months
Although Investec sees better second quarter economic growth than the first, but not by a large amount.. Although the economy doesn't look very bright at the moment, with forecasts having recently been trimmed on the back of US President Donald Trump's pending 30% in tariffs, all may not be doom and gloom. The South African Reserve Bank's (SARB's) Composite Business Cycle Indicators may show that the next six to 12 months don't look that positive, the current position and that of the most recent economic situation, gained. Commenting on the latest indicator, Investec chief economist Annabel Bishop said that she anticipates a better gross domestic product (GDP) growth rate in the second quarter than the first three months of the year. However, Bishop does not expect to see especially strong growth in the second quarter. In the first quarter, GDP came in at a mere 0.1%, with the fact that it gained at all being due to agriculture. This figure surpassed economists' expectations. The economy grew 0.6% last year. Investec Wealth & Investment's data shows that growth has averaged 4.5% since 2010, and the unemployment rate would be significantly lower.
IOL News
16 hours ago
- Business
- IOL News
How rising inflation affects interest rates in South Africa
Although inflation in South Africa has edged up slightly, economists believe that interest rate cuts are still likely – and necessary – as the overall price environment remains subdued even though prices are expected to continue to rise. June's consumer price index (CPI) rose to 3%, up from May's 2.8%, marking the first time in three months that inflation has returned to within the South African Reserve Bank's (SARB) 3% to 6% target range. Despite this small increase, inflation remains low by historical standards and well below the 5.2% seen a year ago. Old Mutual chief economist Johann Els said that while food prices, particularly red meat, were a touch higher than expected, partly due to the effects of foot-and-mouth disease, most categories remained muted. 'Consumer goods inflation is still very subdued,' he said, with clothing, furniture, and appliances still in negative territory year-on-year and core inflation slipping to 2.9%. This paints a picture of an economy with weak pricing pressure, which Els argued justifies a further 0.25 percentage point cut to interest rates at the Monetary Policy Committee meeting next week. Els said government has a 'window of opportunity' to announce a reduced 3% target for inflation. SARB governor Lesetja Kganyago has been pushing for a lower inflation target, although this will require a National Treasury policy change. 'If we miss this window of opportunity over the next few months, it's going to be more difficult for the Reserve Bank to get inflation down sustainably to 3%' as it will start drifting upwards into next year, he says. Els said that inflation is expected to rise moderately through the rest of the year, approaching 4% by December. 'If we miss this window, it will become more difficult for the Reserve Bank to sustainably bring inflation closer to 3% once it starts drifting upwards again.'
Daily Maverick
a day ago
- Business
- Daily Maverick
CPI inches up to 3% as meat prices continue to push up food inflation
South Africa's inflation inched up to 3% in June while meat and vegetable prices added strain to household budgets. South Africa's consumer price index (CPI) accelerated to a 3% year-on-year increase in June, up from 2.8% in May. While the increase is modest and still comfortably at the rock bottom end of the South African Reserve Bank's (SARB) 3% to 6% target range, it underscores the strain of rising food prices, especially meat. This marks the first increase after two months of stability and comes ahead of the SARB's Monetary Policy Committee (MPC) meeting on 31 July 2025, where the prospect of a rate cut remains in focus. Food costs climb Food prices climbed to a 4.7% year-on-year increase in June, up from a 4.4% increase in May. 'Meat — particularly beef — continues to be the main driver of food inflation. Beef prices spiked for a third successive month, with high annual and monthly increases recorded for stewing beef, mince and steak,' Statistics South Africa (Stats SA) said. Stewing beef prices alone rose by an annual 21.2%, the fastest pace on record since the current CPI series began in January 2017. Why are meat prices so high? Wandile Sihlobo, chief economist at the Agricultural Business Chamber, said the surge was driven by two shocks, both easing now. First, an avian flu outbreak in Brazil led South Africa to halt poultry imports from that country, causing panic in the market, he said. Those restrictions had since been lifted, and imports should recover soon. Second, an outbreak of foot-and-mouth disease hit South Africa's beef sector, triggering concerns about supply and panic buying, Sihlobo noted. 'Slaughtering has now resumed in the major feedlots, and we are seeing some easing in red meat prices, which should be reflected in the inflation figures of the coming months.' He added that temporary export restrictions during disease outbreaks eventually increased domestic meat supply, which should further ease prices. Fruits and vegetables also climb Other food categories also saw steep increases, with fruits and nuts up 13.2% and vegetables up 13.6% annually for the second consecutive month. Items such as beetroot, lettuce and carrots saw sharp price increases, while peanuts were slightly cheaper. 'We also view the recent increases in vegetable prices as a temporary blip due to weather issues, and expect supplies of various vegetable products to recover significantly in the second half of the year,' Sihlobo said. Some relief in the trolley Not everything is pricier. Cereal prices cooled in June, helped by cheaper white rice and hot cereals. Dairy also provided some relief. 'Several dairy products are also cheaper than a year ago. Lower prices were recorded for fresh full-cream milk, fresh low-fat milk and eggs,' Stats SA said. Even maize meal, a staple that has seen persistent increases, slowed to a monthly change of 0.4% in June, the lowest since November 2024. Fuel keeps a lid on inflation According to Stats SA, fuel is on average 11.2% cheaper than a year ago. Although still significant, this decline is less steep than May's 14.9% year-on-year drop. 'The fuel price fell by a marginal 5c per litre, essentially not contributing to the inflation outcome, and supporting the low nature of inflation in the second quarter of the year, along with weak economic demand,' Annabel Bishop, the chief economist at Investec, said in a CPI update. The transport category shaved 0.5 percentage points off headline CPI in June, said Stats SA, offsetting some of the upwards pressure from the food category. What this means for you Rising meat prices are making weekend braais more expensive, although this may change in the months ahead. Higher prices for staples like carrots and lettuce are stretching grocery budgets. Cheaper milk, eggs and cereal provide a small offset. If the SARB cuts interest rates, loan and credit repayments could get cheaper. Prices are rising at a slower pace than last year, meaning wages may stretch further. Food price increases are anticipated to be temporary, so as local supply improves, expect some easing in the coming months. How inflation hits your budget For now, inflation remains low by historical standards, but rising food and meat prices are hitting household budgets. With inflation still at the lower end of the SARB's range, economists argue that the bank has room to cut rates. 'Such low inflation provides considerable support for consumers given that most wage increases are higher than this low prevailing rate of inflation. It also, arguably, supports the case for the Reserve Bank to cut interest rates further,' said Dr Elna Moolman, Standard Bank's head of macroeconomic research in South Africa. Relief ahead for food prices Despite the June spike, the trend of rising food prices looks set to moderate. 'We expect food price inflation to moderate in the coming months, as the benefits of ample domestic grains and an expected decent fruit harvest continue to enter the market. We also believe that the worries about meat prices will ease soon as supplies recover,' Sihlobo said. Investec forecasts CPI climbing slightly in the second half of the year due to base effects, potentially reaching 4% by year's end, but still 'reasonably benign'. The bank expects at least one more rate cut this year and possibly another in 2026. DM
IOL News
a day ago
- Business
- IOL News
South African market resurgence new opportunities for traders
South Africa's financial markets are entering a pivotal phase marked by renewed political clarity, structural reform, and increasing global relevance. But as headline risks like US tariffs, rand volatility, and the upcoming G20 summit take centre stage, local retail traders are presented with not only greater opportunity, but more complexity. Against this backdrop, choosing the right trading partner becomes an essential decision - one that can define not just how you trade, but how well you respond to a market in transformation. Political stability and fresh optimism Since the formation of South Africa's new Government of National Unity in 2024, investor sentiment has meaningfully shifted. Markets have rallied, the longstanding 'SA discount' has narrowed, and policy momentum is driving a new level of optimism. Structural reforms aimed at restoring 3% GDP growth are gaining traction, and both domestic and international investors are beginning to reprice the South African opportunity. This renewed confidence is visible not only in equity performance but also in trade volumes across bonds and listed instruments. South Africa remains one of the few global markets where price formation still occurs primarily on-book, on-exchange; an essential feature of a healthy, transparent market ecosystem. The robustness of this infrastructure, supported by a deep institutional backbone, gives retail traders a rare level of access to clean price discovery and liquidity. South Africa is no longer merely a domestic trading hub; it is actively transforming into a globally relevant platform. With its advantageous time zone, regulatory frameworks increasingly aligned with international standards, and the rise of dual listings, the country is well positioned to serve both local and international traders. What sets this evolution apart is its ability to embrace innovation and global relevance without compromising the pragmatic resilience of its foundational ecosystem. Global trade and G20 pressures South Africa is hosting the G20 finance chiefs in Durban this November, placing it at the forefront of global economic discourse. Global uncertainty however still looms large, with President Trump having announced 30% tariffs on South African exports starting August 1, potentially impacting up to 100,000 jobs in the agriculture and automotive sectors. South African Reserve Bank (SARB) Governor, Lesetja Kganyago, has called for increased intra-African trade amidst the tariff wars. This volatility means one thing for South African traders—opportunity is rife, risk management is imperative, and robust infrastructure is a must. While global markets rush to implement changes like T+1 settlement, South Africa retains the flexibility to adopt reforms deliberately, with the depth and resilience to remain stable amid shifts. All of this makes South Africa one of the most exciting emerging markets today, but also one of the most nuanced. That's why the role of a trading partner becomes more than transactional. It becomes strategic. How to unlock long-term success In today's increasingly sophisticated trading landscape, local traders are no longer just participants but strategic actors navigating a dynamic intersection of global opportunity and local nuance. Choosing the right trading partner is no longer a matter of convenience; it's a critical decision that can define long-term success. Selecting the ideal partner begins with seeking out a firm that combines global-grade technology with deep local insight, underpinned by a compliance-first mindset aligned with FSCA regulation. A robust platform should do more than facilitate transactions. It should unlock access to JSE-listed equities, global indices, currencies, and commodities through a secure, intuitive interface. For traders seeking to hedge effectively without amplifying risk, the ability to trade in ZAR is not just a feature, it's a strategic advantage that mitigates currency exposure, often overlooked by global-first platforms. But access alone is not enough. In a market shaped by structural shifts, SARB rate decisions, and geopolitical volatility, traders need more than tools—they need clarity. A partner that delivers timely insights, actionable strategies, and a commitment to education empowers traders to make informed decisions with confidence. Whether you're entering the market or scaling your strategy, resources like a dedicated education hub and deep research coverage provide a learning edge that evolves with your ambitions. Above all, trust is the cornerstone of sustainable trading. In a market re-engaging with global capital, traders need a partner rooted in local credibility. This includes FSCA oversight, on-the-ground support, and a nuanced understanding of South Africa's regulatory and trading environment. It's a level of support that can provide traders with the assurance they need to grow and succeed. South Africa's financial future looks increasingly optimistic. The yield story remains strong. Foreign capital is returning. The market is diversifying. And with more listings and deeper liquidity, retail traders can now operate with a confidence that wasn't possible just a few years ago. But as the opportunity expands, so too does the need for precision, discipline, and guidance. In this moment of change, a strong trading partner isn't just a convenience—it's a competitive advantage. In a market defined by complexity and opportunity, that distinction matters. Because in South Africa's new market reality, the real advantage lies in who stands beside you, not just what stands in front of you.
