South African inflation falls for second month in December

JOHANNESBURG (Reuters) -South Africa’s consumer inflation fell for the second month in a row in December, to 5.1% year on year from 5.5% in November, statistics agency data showed on Wednesday.

The latest reading takes headline inflation slightly closer to the mid-point of the central bank’s 3%-6% target range, or 4.5%, where the bank has said it wants to see inflation before contemplating interest rate cuts.

The average inflation rate for 2023 was 6.0%, lower than 6.9% in 2022, Statistics South Africa said. Inflation is expected to average 5% in 2024.

The South African Reserve Bank will announce a monetary policy decision on Thursday.

All 20 economists in a Reuters poll published last week predicted it would keep its main lending rate steady at 8.25%.

Analyst Annabel Bishop at Investec said Wednesday’s data was unlikely to change the bank’s view on this year’s inflation.

“MPC (Monetary Policy Committee) … will likely continue to have a hawkish tone, warning of inflation risks, although on balance is expected to keep interest rates unchanged,” Bishop said.

“The MPC’s last meeting forecast CPI inflation at 5.0% y/y for 2024 … today’s figure is unlikely to change its 2024 view.”

Core inflation, which excludes food and fuel prices, was unchanged in December at 4.5% in annual terms.

(Reporting by Nellie PeytonEditing by Alexander Winning and Christina Fincher)