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Economists warn that inflation drop unlikely to continue

This is the first time in eight months the rate is back within the South African Reserve Bank’s target range of between 3 and 6%.

Picture: Freeimages.

CAPE TOWN – Despite April’s inflation rate exceeding market expectations, some experts warn that the trend is unlikely to continue.

Stats SA released its Consumer Price Inflation data on Wednesday.

It shows the inflation rate has pulled back to 5.3%, while most expected a rate of 5.6%.

This is the first time in eight months the rate is back within the South African Reserve Bank’s target range of between 3 and 6%.

But Economist Lesiba Mothatha says the Reserve Bank has warned that the inflation rate will remain at the opposite end of the range.

“The medium-term inflation outlook will prove sticky and the Sarb's eye is on the medium-term inflation number. Increasingly, it will remain uncomfortably close to the 6% level in the medium term.”

The data further reveals that increases for food prices in April have been the lowest in 18 months.

Agricultural Business Chamber’s Wandile Sihlobo says: “We do expect for inflation to deaccelerate slightly in the coming months but I don’t think that it’s going to be significant.

“But when you look at an overall picture in 2017, it could as well be around 7.3% or so because, remember, at the start of the year we had high levels of around 12%.”