South Africa’s headline consumer inflation slowed to 4.5% last year

Wealth

South Africa’s headline consumer inflation

South Africa’s headline consumer inflation slowed to 4.5% year on year in December from 5.2% in the previous month, data from Statistics South Africa showed on Wednesday. 

South Africa’s headline consumer inflation slowed to 4.5% year on year in December from 5.2% in the previous month, data from Statistics South Africa showed on Wednesday. Core inflation, which excludes the prices of food, non-alcoholic beverages, fuel and energy, was unchanged at 4.4% year on year in December, from 4.4% in November.

The local market responded mixed to the data and the all-share index gained 0.62% to close at around 54 050 points. The strongest index on the exchange was the finances sector, which closed a massive 3.03% higher. The effect of a positive inflation outlook and a better rand/dollar exchange rate contributed to finances performing well. The rand closed at R13.62 against the greenback for the week, 1.65% stronger than a week before. The local currency gained 1.28% against the euro but lost around 0.82% against the pound as the UK economy tried to find its way regarding Brexit. The stronger currency was negative for the industrial sector, and the rand-hedged heavy index lost 0.93% in value. 

The US Fed has been rethinking the size of the balance sheet and on Friday, the Wall Street Journal reported that the Fed is close to deciding on a balance sheet target size of around $3.5 trillion. This could indicate a slowdown in the repurchasing of bonds issued during quantitative easing. The US economy remains robust despite concerns over slowing global growth. Despite the seemingly good news, the New York S&P index closed 0.22% down.

China’s economy slowed to a 6.4% annual growth pace in the fourth quarter of 2018, down from 6.5% in Q3. For the entire 2018, growth downshifted to 6.6%, the slowest pace since 1990.

The European Central Bank held rates steady at its January meeting that took place last week. ECB president Mario Draghi said that while the risks are now pointed downward, the risk of recession in the near term is low, since financial conditions remain accommodative, labour market dynamics strong, energy prices low and bank balance sheets stronger.

The Dax closed 1.21% higher, and in France the CAC 40 closed 1.02% up. 

The price of Brent crude oil ended the week down by 13 cents at $61.52 per barrel. The steady oil price and strengthening rand should indicate lower consumer inflation to come. 

 

 

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Market data provided by I-Net | News article provided by Securitas with 4D Wealth

Fanie Wasserman, B. Com (Hons)(UJ), PDFP (UOVS), CFP®fanie@securitas.co.za
Johan Steyn, RFP®, Cell. 082 680 9510, johan@securitas.co.za
Albert van der LindeB. Com (US), B. Com (Hons)(UP), Cell. 076 087 3084, albert@securitas.co.za
Hannes Bresler, CFP®, B. Com (Hons)(UJ), Pr. Tech Eng, Cell. 082 823 7973, hannes@securitas.co.za
Michelle Kleinhans, 082 850 3092, michelle.kleinhans@securitas.co.za