Financial Planning

SA’s inflation rate remained unchanged at 5.90% in April 2022

Adriaan Pask, CIO at PSG Wealth

SA’s Consumer Price Index (CPI) remained unchanged at 5.90% in April 2022. Economists expect that the South African Reserve Bank (SARB) could hike the repo rate by 50 basis points (bps) to 4.75% this Thursday. In an attempt to tame inflation which has reached the upper end of the bank’s target range of between 3% to 6%. We remain watchful of the impact of fluctuations in inflation and interest rates on shares exposed to substantial discount-rate risk over this period and we will continue to adjust our products when warranted. 

The Event

  • South Africa’s annual Consumer Price Index (CPI) remained unchanged at 5.90% in April 2022. 
  • This was largely driven by a spike in food and non-alcoholic beverages of 6%, housing and utilities (which rose by 4.80%), transport increased by 14.70%, while miscellaneous goods and services rose by 3.80%. 
  • On a monthly basis, inflation increased by 0.60%, following a 1%increase in the previous month. 
  • Annualised core inflation, which excludes food, non-alcoholic beverages, fuel, and energy prices, rose to 3.90%in April 2022, meeting predictions. 

The impact

  • Shortly after the data was released at 10h20 the FTSE/JSE All Share Index rose to 0.35%. The biggest winners of the morning session were South32 (up 4.20%), Alphamin (2.94%) and Gold Fields (1.82%). 
  • The rand was in the green at 10h35 trading at R15.95 to the US dollar, R16.77 to the euro and R19.79 to the British pound. 
  • South Africa’s 2-year government bond yield increased to 5.64%, the 5-year and 10-year yields came in at 8.41% and 10.79%, respectively. 

The assessment

  • Economists expect that the South African Reserve Bank (SARB) could hike the repo rate by 50 basis points (bps) to 4.75% this Thursday. In an attempt to tame inflation which has reached the upper end of the bank’s target range of between 3% to 6%. 
  • A weaker rand at the moment compared with the bank’s quarterly projection model of R15.40/USD could also impact the SARB’s decision. 
  • We remain watchful of the impact of fluctuations in inflation and interest rates on shares exposed to substantial discount-rate risk over this period and we will continue to adjust our products when warranted. 
  • The next release date for inflation data is scheduled for Wednesday, 22 June 2022.






Related posts
Financial Planning

Three tips for teaching young adults how to handle income

Financial Planning

eBucks named the best in the world for the use of technology across all loyalty programmes

Financial Planning

The impact of debt on father figures

Financial Planning

Leaving the ultimate legacy to beneficiaries