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Affirmation Transpires in South Africa: CPI falls and Retail Sales Rise

Affirmation Transpires in South Africa: CPI falls and Retail Sales Rise

Walker England, Kara Dailey,

Talking Points:

  • Headline CPI falls from 5.3% in December 2014 to 4.4% in January 2015
  • Retail Sales end 2014 strong increasing by 3.4% (y/y)
  • USDZAR trades back below resistance after a false breakout

Hesitant at last month’s MPC meeting, the SARB now finds affirmation in today’s CPI and retail sales figures. After falling drastically in January, consumer prices in South Africa now firmly rest within the Reserve Bank’s 3-5 percent inflation target. Furthermore annual consumer spending has picked up, increasing by 3.4%.

In causing the index to fall 0.9 percentage points, prices on average decreased by 0.2% between December 2014 and January 2015. Amongst the nine provinces, annual inflation was the lowest in Limpopo (4.0%) and highest in Western Cape (4.9%). Directional movements among the components were mixed across various time frames.

Food and alcoholic beverages increased by 0.9% month-on-month, yet when measure at an annual rate they fell by 0.7%. Simultaneously, the transportation index decreased across the board. Prices fell by 3.0% (m/m) and 4.2% (y/y) as a result of a 127 c/liter discount in the price of fuel. Conversely, miscellaneous goods and services increased across the board; prices increased 0.6% (m/m) and 0.2% (y/y).

Also increasing, December retail sales. On trend, the index was elevated in the 12th month due to high growth rates in the following categories: household furniture and appliances (9.8%) pharmaceuticals, medical goods and cosmetics (5.6%) and clothing, textiles and footwear (5.3%).

USDZAR Daily Chart

dailyfx usdzar daily chart February 2015

Chart Created by Walker England Using MarketScope2.0

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.