South Africa Inflation To Lower In 2024

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South Africa Inflation To Lower In 2024

South Africa's Inflation To Touch 5% In 2024, According To Survey

According to the latest poll from an independent body, South African inflation will likely decline in the year 2024. They cited that weak consumer spending on a domestic level and slow growth will send inflation lower.

In 2023, the average inflation in South Africa will be around 5.8%, which will likely go lower and touch 5% in 2024. In 2025, the inflation in South Africa will go even lower and reach 4.5%. These forecasts were made based on the opinions of economists after calculating the average inflation rate.

South African Inflation Within SARB Target Range

Given that South Africa's reserve bank has set a target range of 3 to 6% of inflation, the average inflation rate this year will already be in the target range.

According to BNB Paribas, the pace of disinflation will pick up in the year 2024. They also added that several economic indicators are now pointing to this outcome.

If we take a look at the bigger picture, it shows that the bottlenecks faced by the global supply lines have cleared as of late. This has allowed the prices of several goods to decline in the last few months. In addition, the input prices at the domestic level have also turned lower, which is pushing the inflation lower as well.

Another worrying piece of news is that the slowdown of inflation in South Africa is driven by slow demand. In simple words, economic progress has reached such a low point that consumer demand has been impacted significantly.

As for the first rate cut from the SARB, it will still take a while, which means the chances of an uptick in inflation are very slim to none.

The most probable case is that the SARB will cut the interest rate in May 2024 as it still wants to see how the inflation situation unfolds. After the May meeting, a 25 bps rate cut will be done in each quarter until the end of the year 2024.

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