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Sell-Side Lack Clear Consensus Over Average 2024 CPI Forecasts

SOUTH AFRICA
  • In Goldman Sachs’ view, the most notable feature of the January CPI print was a continued sharp decline in food inflation. GS note that that the second consecutive benign monthly food price reading is more confirmation that the local supply shock observed in September-November is now behind us. As such, they expect that annual food inflation will continue to fall by 0.8-1pp per month in the next two months.
  • Goldman Sachs maintain their outlook for continued disinflation over the course of the year on a combination of weak demand-side pressures and further supply-side relief. They also maintain their forecast for inflation of 4.4% on average in 2024.
  • Nedbank note that despite the various risks to the outlook, weaker global and domestic demand – given elevated interest rates – are expected to contain the upside risks to inflation. They expect CPI to average 5.0% this year.
  • Against this backdrop, they say the SARB’s MPC will likely cautiously monitor the upside risks to the inflation outlook. Consequently, interest rates will be kept steady in the first half of the year, with the first cut of 25bps expected in July, followed by cuts of similar magnitude in September and November.
  • HSBC expect headline CPI to average 5.3% in 2024 and core CPI to average 4.8%. They expect a shallow rate cutting cycle that will only start in September 2024. They think the SARB will remain cautious of upside inflation risks that are likely to be exacerbated by logistics constraints and a weak ZAR.
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