The South African Reserve Bank has developed two new measures to better understand underlying price pressures, which will influence the MPC’s interest rate decisions, and both currently show elevated readings.<\/p>\n\n\n\n
Witness Simbanegavi, the editor of the SARB’s biannual Monetary Policy Review, said a supercore measure plus a gauge dubbed the \u201cpersistent and common component of inflation\u201d will be used alongside headline and core price growth published by Statistics South Africa as additional tools to inform monetary policy.<\/strong><\/p>\n\n\n\n The PCCI is higher than core inflation, which stood at 4.9% last month.<\/p>\n\n\n\n According to the review, this mainly reflects the below-average post-pandemic housing and medical aid inflation. <\/p>\n\n\n\n The supercore measure also shows that inflation pressures have risen as the economy recovered from the COVID-19 pandemic, with outcomes hovering slightly above the target midpoint in recent months.<\/p>\n\n\n\n Risks to underlying inflation include price growth expectations, the normalisation of health insurance and rental housing inflation and currency weakness, the report said.<\/p>\n\n\n\n South African inflation has been above the 4.5% midpoint of the central bank\u2019s target range, which it prefers to anchor expectations for since May 2021. <\/p>\n\n\n\n The MPC has left the benchmark interest rate at 8.25% since May in a bid to return it to that goal.<\/p>\n\n\n\n
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