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SA INFLATION STEADY
South Africa’s inflation rate has held steady in the month of May.
Consumer prices rose 2.8% year-on-year in May—exactly the same as the previous month and in line with economists’ predictions.
Does that mean we’ll get an interest rate cut when the Reserve Bank meets next month?
Not so fast.
A lot has changed in the last month, starting with the Trump tariffs and, perhaps more importantly, the Israel-Iran conflict.
Since Israel’s attacks began last week, the price of oil has spiked.
Brent Crude is trading this morning at $76.50, an increase of more than 20% since the beginning of June..
That makes it very likely that we’re in for a fuel price hike at the beginning of next month, which will drive inflation.
Those tariffs I mentioned will kick in on July 9th for South Africa.
However, the outlook for inflation here has suddenly become very uncertain, so my guess is that the Reserve Bank will remain neutral.
That’s what the US Fed has just done – much to the fury of Donald Trump.
SA, US TO RESUME TRADE TALKS
However, regarding the tariffs, Bloomberg reports that South Africa and the US are set to resume trade talks at a major US-Africa Business Summit in Angola next week.
From our side, we’re offering a major ramping up of natural gas imports and a joint fund for the exploration of critical minerals here. We’re also looking for duty-free US quotas for the car and steel industries.
Will we get a deal before July 9th? It seems unlikely. We’re also asking for tariffs to be left where they are until a deal is concluded, or not, as the case may be.
In broad terms, tariffs stand at the moment at 10% - on July 9th, they’re due to triple.
