South African inflation falls more than expected, sets stage for rate cut
South Africa's inflation rate fell more than expected last month to its lowest since April 2021, data showed on Wednesday, reinforcing expectations that the central bank will cut interest rates this week.
Headline consumer inflation fell to 4.4% year-on-year from 4.6% in July, just below the 4.5% midpoint of the South African Reserve Bank's target range where it likes to see inflation.
The median forecast of analysts polled by Reuters was for a reading of 4.5%.
"The table is laid for the interest rate cutting cycle to commence," said independent economist Elize Kruger.
Easing price pressures from transport, housing, restaurants and hotels contributed to August's lower inflation print, data from Statistics South Africa showed.
However food inflation ticked up to 4.7% in annual terms from 4.5% in July, reversing an eight-month downward trend.
The figures hardened expectations that the central bank will cut interest rates on Thursday for the first time in more than four years.
Even before August's inflation figures were released, economists polled by Reuters were predicting the central bank would cut its main lending rate by 25 basis points.
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