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Reserve Bank expected to leave interest rates unchanged

Statistics South Africa said consumer price inflation came in at 5.9% year-on-year in August.

Lesetja Kganyago. Picture: AFP

JOHANNESBURG - The South African Reserve Bank's Monetary Policy Committee is widely expected to leave interest rates where they are.

The bank has previously said it expects the economy won't grow at all this year and that inflation remains a concern.

Yesterday, Statistics South Africa said consumer price inflation came in at 5.9% year-on-year in August.

Economist Thabo Leoka says the bank has a tough decision to make.

"They can't hike rates because that will stall growth further, especially if forecast is zero growth for 2016."

On a month-on-month basis prices also dropped 0.1% after a 0.8% increase in June.

Core inflation which excludes the prices of food, non-alcoholic beverages, petrol and energy remains unchanged at 5.7% year-on-year but slowed to 0.2% month-on-month from 0.6%.

Investment Solutions' chief economist Lesiba Mothata said: "For the consumer, I think there will be relief in terms of an outlook of high interest rates. From moderation in terms of price pressures at the stores, it's likely to be coming through."

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