South Africa's inflation outlook has improved and it is hoped that an easing since August is the start of a consistent downward trend, central bank Governor Tito Mboweni said on Thursday. He also said in aspeech at a diplomats dinner that while the local banking system had largely escaped the global credit crisis, the real economy was not immune.
South Africa's consumers and producer inflation eased more than expected in October, data showed this week, which together with slowing growth has raised speculation of a cut in interest rates.
The targeted CPIX inflation slowed to 12,4% year-on-year from 13% and factory gate inflation fell to 14,5% from 16% previously.
Most analysts expect the central bank to start unwinding the five percentage points in rate hikes made since June 2006 early next year, but markets are pricing in a cut in December. The repo rate stands at 12%.
Mboweni said the inflation outlook had improved to some extent, with previous upside risks -- global food and oil prices -- falling, and domestic demand pressures subsiding in response to previous rate increases.
"The most recent measure, published yesterday, showed that CPIX inflation declined to 12,4% in October compared to the recent peak of 13,6% seen in August. We are hopeful that this is the start of a consistent downward trend."
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