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<p><strong>By: Sanisha Packirisamy, Economist at Momentum Investments and Herman van Papendorp, Head of Investment Research & Asset Allocation at Momentum Investments.</strong></p>

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<h2>Highlights</h2>

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<ul><li>Headline inflation crept back into the lower end of the 3% to 6% inflation target range in July 2020. Utility tariff increases urged inflation higher to 3.2%. </li></ul>

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<ul><li>The headline and core inflation figures were slightly above the Reuters consensus forecasts of 3.1% and 3.0%, respectively. Core inflation surprised to the upside at 3.2% in July 2020 and increased by 0.7% in the month. </li></ul>

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<ul><li>Although lockdown restrictions limited Statistics South Africa’s (Stats SA) fieldwork used to collect survey data in earlier months, Stats SA has resumed its normal schedule and the use of its regular statistical methodologies. The gross domestic product reading for the second quarter of the year will be published by Stats SA on 8 September 2020, while the August 2020 consumer inflation number will be printed on 30 September 2020.</li></ul>

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<ul><li>The electricity price index increased by 6.2% month on month (m/m) in July 2020, broadly in line with the energy regulator’s Eskom Retail Tariff and Structural Adjustment (Ertsa) determination.</li></ul>

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<ul><li>In our view, decimated demand and anchored inflation expectations leave room for the SA Reserve Bank (Sarb) to ease interest rates by another 25 basis points in 2020. </li></ul>

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<p>Download the full document prepared by the <strong>Momentum Investments Macro research desk</strong> regarding the consumer price inflation. </p>

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<div class="wp-block-button"><a class="wp-block-button__link" href="https://cover.co.za/wp-content/uploads/2020/08/Utility-tariff-increases-push-headline-inflation-back-into-the-bottom-edge-of-the-3-to-6-target.pdf" target="_blank" rel="noreferrer noopener">DOwnload Here</a></div>

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<p></p>

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