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Nedbank, Investec Expect Inflation to Average Around 4.5% in 2024

SOUTH AFRICA
  • Nedbank expect inflation to drift slightly higher in the coming months as base effect dissipate. They expect inflation to be sticky just above 5% in the first six months before stabilising close to 4.5% over the year's second half. On balance, they say the risk to their forecast still resides on the upside, due to a vulnerable rand, the upcoming El Niño weather pattern and persistent load-shedding, which could still cause food and fuel prices to settle higher than anticipated.
  • With inflation expected to remain within the target range, the SARB will probably maintain steady interest rates tomorrow and for the remainder of 2023, Nedbank say, with the first cut in the first quarter of 2024 and the repo rate falling to 7.25% in November 2024.
  • Similarly, Investec say inflation is likely to average close to 4.5% y/y next year, indicating no need for a hike tomorrow. They also say the risk is to the upside for inflation as drier conditions from the El Niño weather pattern could put pressure on food prices, although they sat it is too early yet to determine the degree.
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