Annual CPI Inflation Expected to Show Little Deviation from Earlier Pace in August

South Africa is due to report August inflation figures at 0900BST/1000SAST. Consensus looks for an uptick in headline inflation to +4.8% Y/Y from +4.7%, according to a Bloomberg survey of analysts. Core inflation may have stayed at +4.7% Y/Y last month.

• Nedbank write that "after three consecutive months of rapid deceleration, inflation probably edged up to +4.9% in August as the base effects started to fade". In their view, "the upward pressure in August will mainly emanate from fuel prices," while food price growth may keep moderating on the back of lower global food prices and shrinking household demand.
• Goldman Sachs flag divergent inflation trajectories in South Africa and other economies due to Pretoria's weak cyclical position. In their view, "a negative output gap of around 3% of GDP implies an ongoing disinflationary impulse". They expect inflation to average at +4.1% Y/Y in 2024, which is below SARB/consensus forecasts of +5.0%/+4.9% respectively. For this week, they expect August CPI and core CPI to print at +4.7% Y/Y each, as a "decline in food inflation likely roughly offset a projected uptick in fuel inflation".