Hot Core CPI Print Sees no Relief for the SARB

SOUTH AFRICA SEP CPI +0.1% M/M (= FCST); AUG +0.2% M/M

SOUTH AFRICA SEP CPI +7.5% Y/Y (FCST +7.6%); AUG +7.6% Y/Y

SOUTH AFRICA SEP CORE CPI +0.5% M/M (=FCST); AUG +0.2% M/M

SOUTH AFRICA SEP CORE CPI +4.7% Y/Y (=FCST); AUG +4.4% Y/Y

• Headline South African inflation edged down to +7.5% y/y, a small improvement on consensus looking for CPI to keep pace with August. Falling fuel prices were a key downwards driver.
• This was the second month of cooling prices, following an over 13-year high of 7.8% y/y in July.
• Food prices continued to expand, albeit at a softer rate in September.
• Absa anticipated the hot rise in core prices to +4.7% y/y due to both housing and health insurance costs, the latter of which accounts for over 7% of the weighting and was not surveyed in the previous months.
• South African inflation has remained above the SARB's 3-6% target range for five consecutive months. The October rate due prior to the SARB's November rate decision and will be closely watched.
• On Tuesday, SARB Governor Kganyago highlighted that inflation rates will only see easing once moving towards 4.5% stating “if that is sustained, then it’s time to adjust policy".