PPS: CPI for October 2024

Annual consumer price inflation was 2.8% in October 2024 beating market expectation of 3.0%, down from 3.8% in September 2024.

The CPI decreased by 0.1% month-on-month in October 2024. October’s print is the lowest since June 2020 (during the COVID-19 pandemic) when the rate was 2.2%.

Falling fuel prices remain the primary factor behind the slowdown. Petrol and diesel prices declined by 5.3% between September and October, taking the annual rate for fuel to -19.1%. After remaining steady in the 4.5%-4.7% range, annual inflation for food and non-alcoholic beverages retreated to 3.6% in October. This is the lowest rate since November 2019.

The main positive contributors to the annual inflation rate were housing and utilities (accounting for a quarter of the CPI basket) and miscellaneous goods and services (14.8% of the CPI basket) which contributed 1.1% and 1.0% respectively. Transport (14.4% of the CPI basket) was the only negative contributor, contributing -0.8% to the annual inflation rate.

The slowdown to below the lower end of the central bank’s 3%-6% inflation target range will likely persuade the Monetary Policy Committee (MPC) to ease monetary policy. The move in the annual inflation rate provides a supportive environment for the Reserve Bank to continue cutting interest rates. The expectation is for the MPC to cut the policy rate by a quarter-point to 7.75%, cognisant of the global economic uncertainties and potential shifts in US policy.