CAPE TOWN: South Africa’s inflation is expected to average 5.4% in 2017, Finance Minister Malusi Gigaba revealed when he presented his maiden Medium Term Budget Policy Statement in Parliament on Wednesday.The minister stated that the country’s inflation expectation remained near the upper end of the target of between 3% and 6%, noting that the price movement outlook had improved since the main 2017 budget was presented earlier this year. “Headline inflation is now expected to average 5.4% in 2017, down from 6.4%. The revisions to the inflation outlook reflect lower oil and food prices, and a slightly stronger exchange rate assumption. “The risks to the inflation outlook remain currency depreciation, higher oil prices, rising electricity tariffs and further sovereign rating downgrades,” he said.
The minister said the consumer price index returned to within the target figure in the second quarter of 2017, as changes in the index declined from 6.6 % in January to 4.8% in August. Policy and political uncertainty remained central risks to the domestic economic outlook, the minister said. “Elevated policy and political uncertainty, coupled with weak confidence, discourage investment and consumption. Further risks include a downgrade of the local currency rating and higher administrative prices, which would lead to higher inflation,” according to Gigaba.
