Economy

PPS Investments: CPI for January 2023

Consumer price inflation increased by 6.9% year-on-year in January 2023, lower than the 7.2% year-on-year print in the previous month. This signals a continuation of the decline in inflation growth since the peak of 7.8% in July 2022. Month-on-month inflation increased by 0.1%, compared to the 0.4% increase in December.

Consumer inflation softened to 6.9% in January

Headline inflation was 6.9% y/y in January, down from 7.2% in December. Compared to the previous month, headline inflation is down 0.1%. This outcome is slightly higher than our expectation of 6.8%, but in line with consensus.

Forecast scenarios for key macro data in 2023

Interest rates: A slower pace but with optionality

The SA Reserve Bank (SARB) Monetary Policy Committee (MPC) opted to hike the repo rate by 25 basis points (bp) to 7.25% in the first meeting of 2023. While this was against the consensus forecast for 50bp, the forward rate agreement (FRA) market had been oscillating between 25bp and 50bp in the weeks leading up to today’s decision.