INFLATION
"The rise in South Africa's headline inflation rate has been
shaped primarily by fuel, electricity and food price inflation.
"With core goods and food higher in the near term, headline
inflation for 2023 is revised significantly higher to 6.0% (up
from 5.4%). Despite this, food and fuel inflation are expected
to ease, resulting in a headline forecast of 4.9% for 2024 and
4.5% in 2025.
"Risks to the inflation outlook, however, are assessed to
the upside. Despite some easing of producer price and food
inflation, global price levels remain elevated."
"Electricity prices and other administered prices continue
to present clear short and medium-term risks."
"Load-shedding may additionally have broader price
effects on the cost of doing business and the cost of living, in
particular as diesel consumption increases."
ECONOMIC GROWTH "Economic growth has been volatile for some time and prospects for growth appear even more uncertain than normal. An improvement in logistics and a sustained reduction in load-shedding or increased energy supply from alternative sources would significantly raise growth. "Further upside risks to growth could emerge from a stronger recovery in China, if commodity export prices rise. Downside risks however emanate from more modest global growth rates and the lower terms of trade and trade volumes that would follow. "Overall, the risks to the medium-term domestic growth outlook are assessed to be balanced. Nonetheless, the domestic and global outlook appears to be highly sensitive to new shocks."
DECISION "Against this backdrop, the MPC decided to increase the repurchase rate by 50 basis points to 7.75% per year, with effect from the 31st of March 2023.
"Three members of the Committee preferred the announced increase. Two members preferred a 25 basis points increase.
"The revised repurchase rate is now less accommodative
and is more consistent with the current view of risks to
inflation."
(Compiled by Olivia Kumwenda-Mtambo; Editing by James Macharia)
