S.Africa’s inflation rose 2.9% y/y in November

South Africa's inflation rate saw a slight uptick in November, rising to 2.9% year-on-year, up from 2.8% in October. Despite the increase, overall inflation remains relatively low, reflecting some stability in the economy. In a recent interview on CNBC Africa, Koketso Mano, Senior Economist at FNB, provided insightful analysis on the implications of the latest inflation data on interest rates in South Africa. Mano highlighted key points from the data, shedding light on the trends in specific categories that are influencing inflation. One notable observation was the combination of factors that kept food and non-alcoholic beverages inflation subdued, countering the impact of fuel price hikes. The economist emphasized the importance of understanding the interplay between various components of inflation, such as positive base effects and monthly deflation in food prices, which contribute to the overall inflation outlook. Looking ahead, Mano projected that inflation would likely hover around 3% in December, staying within the lower end of the target band. He anticipated a gradual increase in inflation beyond 2025, driven by improving domestic demand supported by factors like lower interest rates and consumer confidence. Mano also addressed the implications for monetary policy, suggesting that the Reserve Bank could maintain a dovish stance and continue cutting interest rates in 2025, given the favorable inflation forecast. He underscored the importance of monitoring global risks, such as geopolitical tensions and demand-supply dynamics in oil markets, which could influence inflation and exchange rate movements. Mano's comprehensive analysis provided valuable insights into the factors shaping South Africa's inflation outlook and the potential implications for monetary policy in the coming year. Overall, the data points to a relatively stable inflation environment, with room for further rate cuts to support economic growth and consumer spending.