Inflation expected to fall

By Staff Writer
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Inflation expected to fall

Inflation has been the driver of most of South Africa's economic policy the last two years.
The government has pursued a consistent inflation targeting approach.
This has basically consisted of raising interest rates, raising interest rates, and er...raising interest rates. This has had a massive effect on saving, borrowing and the housing market.

However it is widely believed that inflation may have reached the turning point and will now start to drop continously.

The Dispatch tells us that Stats SA will release its inflation data for October this Wednesday the 26th. Independent economists seem to be pretty consensual on inflation finally falling and continuing to do so.
Most economist believe that in fact it peaked in August at 13.6% while in September it fell to 13% and everyone is holding thumbs that it will continued to have fallen in October.

The major driver of the fall seems to be the falling price of oil as the consequences of petrol prices influence so much of our economy.
Oil prices are a factor in just about every single thing that you can buy, unless it is the sort of sustainable carried to market on foot type of goods.
And when was the last time you bought one of those?
Both iAfrica and Businees Report tell us that car insurance however is expected to rise in cost.

Business Times also reports that cheaper oil is likely to have had a downward effect on the rate of inflation.

Another driver of the inflation rate going down is that Stats SA is in the process of implementing a new basket of inflation. The new weightings that will be employed have lead many commentators to complain that the official rate of inflation is artificially high.

Some economists are even saying that inflation will be down to 10% by the end of the year.

The upshot of this is that eventually if inflation is coming down, so too should the interest rate. The predictions of when this will happen vary widely from December this year to April next year to the end of next year only. We will only tell when it is done as the MPC tends towards conservatism and is not prone to populist hurried decisions.

Recently in the news Fitch the ratings agency caught a lot of flak for downgrading SA's investment rating. Business Times talks to them to see what else they have to say. Their concerns were in part due to our large current account deficit, which means we import way more than we export.
The Mail and Guardian reports that the Treasury intends to step in and help get foreign funding to cover the gap.

In international news The Economist tells us that Barack Obama has appointed a skateboarder as his Treasury Secretary.

Justmoney reckons that something like this has been way overdue dude, now let's see if he can flip the US out of the worst market conditions they have ever faced.

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