Inflation is finally falling
Statistics SA released the latest inflation figures yesterday...and it looks like we have finally turned the corner.
Inflation is measured by two indexes CPI and CPIX CPI is consumer price inflation which is basically the rate at which all good and services are going up in price. CPIX is the same except that it eXcludes mortgage costs.
CPI has fallen to 12.1% and CPIX has fallen to 12.4%.
This is good news for the economy in general but from the gap between CPI and CPIX we can see that the housing market is under pressure as prices rise slower than the rest of the economy. The housing market is a tough one at the moment and many people are re-mortgaging and consolidating their debt into their bonds to get through the current economic difficulties. The inflation figures were carried by most of the major news outlets today.
The Mail and Guardian noted that inflation had dropped from 13.1% annually in September to 12.1% annually this month. The rest of the article is devoted to calls for an earlier interest rate cut than had been expected, with a tentative call for 50 basis points or half a percent as early as the 11th December meeting of the Monetary Policy Committee (MPC). The Mail and Guardian also published a follow up story to this citing expert opinion from Nedbank, which expected inflation to decline further again in November.
Business Day reported that inflation has fallen for the second month running, leading to the expectation that it was now likely to trend downward. This article also pointed out the re-weighting of the basket of goods used to measure inflation would lead to a fall in inflation figures of up to three percent, which would mean that in reality inflation was already much lower than we think.
Business Report was of the opinion that the prospects of a rate cut at the next meeting of the MPC were improving. They noted that we will still way out of the targeted range of 3% to 6% but that the figures were improving quickly and dramatically. They also noted that slower demand for commodities globally due to the international crash were going to ease inflationary pressures. They carried an opinion that put inflation at 8% from January.
Business Report in a related article looked at the new basket of goods that will be introduced by Stats SA to measure inflation and in particular the role of food which has been lowered as a component from 27% to 19%.
Business Times carried an article looking at the recent data released by the National Credit Regulator which put the number of consumers in good credit standing at 60.4% down from 61.6% in March. This means that almost 40% of consumers are in trouble, and may need to seek debt counselling or consolidate their debts in order to get back on track and rehabilitate their credit records.
Good standing is defined as if none of your accounts are more than two months in arrears. So if you haven't been able to pay any of your accounts off in the past two months you are in trouble and will need to go speak to the people you owe money to or seek profession debt help.