Drop in inflation expected in 2017 - poll

According to the survey, drought is a big driver behind the drop in inflation expectations for next year.

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CAPE TOWN - A survey released by the Bureau for Economic Research has revealed some optimism around inflation.

The survey for the third quarter expects 6% inflation for next year, which is a marginal drop of 0,2% from the second quarter survey.

The bureau's Nicolaas van der Wath says the drought is a big driver behind the drop in inflation expectations for next year.

"The food inflation is expected to moderate slightly because the drought is a temporary thing and the next season, according to the weather forecast, should be more normal."

He adds the 0,3% decline in business respondents' five-year inflation forecast is due to the weaker economy that has led to a decline in the demand for goods.

"Demand is one of the drivers of inflation so competition for goods and services is not as strong, which doesn't drive inflation."

Respondents also anticipate an economic growth rate of 1,3% in 2017.