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Necessary cookies are absolutely essential for the website to function properly. And the SARB appears to have begun a tightening cycle, which should offer support to the domestic currency.Ī competent, independent and inflation-targeting central bank in such a situation is not a bad thing to have. If the rise in global oil prices is checked and the rand holds its ground, producer and consumer prices will hopefully start to brake. Crude prices rose steadily after that to more than $80 a barrel in late 2018 but South African PPI remained below 8%, partly because the rand put in some gains over part of that period.īut the current situation is rather different, with the rand close to 16/$ and looking vulnerable, crude oil prices already over $80 a barrel, and global inflation on an uphill march. The last time PPI was this high - 8.1% - was in February of 2016, at a time when average prices for the Brent crude benchmark were below $40 a barrel. The rise in fuel prices in November has also been flagged by analysts as a sign that price pressures remain in the pipeline, though the recent historical record suggests these could perhaps be more muted than expected. So the inflation picture is mixed at the moment and the generally weak state of the economy is at least containing some pressures - which in and of itself is not a good thing. Consumer inflation was running at 5% in both October and September - above the midpoint of the SARB’s 3-6% target range - though it is down from its 2021 peak of 5.2% in May.