Reserve Bank expected to increase repo rate in a bid to stem inflation

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Reserve Bank expected to increase repo rate in a bid to stem inflation

Rising fuel prices have been taking their toll on inflation, with CPI at its highest level in 13 years.

FILE: South African Reserve Bank Governor Lesetja Kganyago. Picture: @SAReserveBank/Twitter
  • South African Reserve Bank
  • Repo rate
  • Inflation

JOHANNESBURG – With inflation now way above the Reserve Bank’s target range of 3% to 6%, another substantial increase is expected in the repo rate.

Rising fuel prices have been taking their toll on inflation, with CPI at its highest level in 13 years.

Stats SA has recorded annual consumer price inflation at 7.4% for June from 6.5% the month before.

Inflation is interlocked with fuel prices, which determine the cost of certain goods as they need to be transported from factories to retailers.

Stats SA said transport costs increased by a massive 20% in the past reporting period, with fuel prices sky-rocketing.

Nedbank economist Isaac Matshego said another repo rate increase was on the way on Thursday to try and stem inflation.

“We expect the Reserve Bank to hike the repo rate by half a percentage point.”

He said the bank had no choice: “That will be in response to the higher inflation rate, which is above the 6% level.”

Matshego said the repo rate was expected to continue to rise as the bank tried to get inflation under control.

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