PPS Investments : CPI for February 2024
February 2024 saw a notable increase in consumer price inflation, reaching 5.6% year-on-year, up from January's 5.3%.
Despite this being the ninth consecutive month within the 3%-6% target band, it still exceeds the 4.5% target set by the South African Reserve Bank (SARB).
Key Points:
• Contributors to Inflation: Housing, utilities, and food were primary drivers, with respective increases of 1.4%, 1.2%, and 1.1%. Electricity prices rose by 6.0%.
• Market Outlook: Contrary to expectations, inflation and interest rates have not declined, resulting in subdued returns for local risky assets.
• PPS Strategy: We maintain a cautious approach, holding neutral exposures to local equity and bonds due to relatively cheap valuations.
• SARB Stance: The SARB remains hawkish and is unlikely to adjust interest rates with inflation above the 4.5% target, waiting for a decline in US interest rates.
