South Africa CPI Unchanged at 4.5%

• South Africa CPI Unchanged at 4.5%

Prices of goods and services remained unchanged in South Africa in the month of June, according to Statistics South Africa.

The Consumer Price Index (CPI), which measures inflation, rose by 4.5 percent year-on-year, same as in May but 0.1 percent higher than economists’ projection.

On a monthly basis, prices rose by 0.4 percent in June, Statistics South Africa stated on Wednesday.

The inflation rate has remained below 4.5 percent since December 2018, forcing the South African Reserve Bank to lower its inflation projection from 4.5 percent to 4.4 percent during last week Monetary Policy Committee meeting.

Also, the apex bank cut the benchmark rate by 25 basis points to 6.5 percent in an effort to stimulate growth and support job creation amid a slowing economy.

Still, price pressures remain subdued with core inflation around 4.1 percent and 4.3 percent.

Meanwhile, the South African economy contracted by 3.2 percent in the first quarter, forcing global credit ratings to lower the country’s 2019 growth forecast. Moody’s lowered South Africa’s growth projection for 2019 to 1 percent, down from the 1.3 percent previously predicted.

“The quarterly decline, the largest in 10 years, is credit negative for the Government of South Africa’s (Baa3 stable) revenue and policy options,” Lucie Villa, Moody’s lead sovereign analyst for South Africa, wrote in a research report.