There are still concerns with regards to the South Africa economy. Statistics released today show that the consumer price index excluding mortgage rate changes (CPIX) for metro and other areas, which is used by the South African Reserve Bank (SARB) for its inflation target, was up 13.6% year-on-year (y/y) in August from 13.0% y/y in July. Forecasts had expected inflation to come in at 13.2% so the 0.4% differential has many worrying.

It is thought that inflation is not going to come down as quickly as many may think, as food and electricity prices continue to rise. In the long term, as fuel prices start to ease, we may start to see a decline in the rate of inflation. It will be interesting to see how the reserve bank looks at these new figures and if they decide to increase interest rates again. The general consensus is that the central bank will not hike rates any time soon as we all hope that the rate of inflation will start to come down in early 2009.

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