Seifsa welcomes easing inflation

The Steel and Engineering Industries Federation of Southern Africa (Seifsa) on Wednesday welcomed the easing in consumer price inflation to 6.3% in February, down from 6.6% in January.

Contributors to easing inflation included food and nonalcoholic beverages, as well as household contents and services. 

Seifsa chief economist Tafadzwa Chibanguza said the strengthening rand had a positive impact on inflation and on the inflation outlook.

“The rand is actually doing a lot of work for the Monetary Policy Committee of the South African Reserve Bank, which meets next week to decide on the next rate move,” he said.

Chibanguza added that the February consumer price index reading, together with the current level of the rand, measuring R12.65 to the dollar, presented a case for rates to remain on hold next week.

Seifsa’s view was further supported by the core inflation reading, which excludes food, nonalcoholic beverages, fuel and energy, which was recorded at 5.2% year-on-year in February. The reading is down from the December 2016 and January 2017 year-on-year readings of 5.9% and 5.5%, respectively.

“Easing inflation translates favourably to consumer balance sheets, hence the February 2017 reading is definitely a welcome move,” Chibanguza noted.