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Trade Data Seesaws Between Q1 Growth And CPI Drag

25 May 2021 – Strong quarter-on-quarter trade data from the retail, wholesale and automotive sectors all bodes well for GDP dynamics, Statistics SA has revealed.

According to the Bureau for Economic Research, all three spending categories posted a quarterly expansion for the period January to March (Q1).

Unfortunately, Consumer Price Inflation (CPI) figures showed a marked inflation increase, the Bureau adds.

CPI inflation even came in marginally above the consensus forecast, it says.

“It is perhaps useful to highlight that it was not just base effects that drove prices higher.

“Indeed, higher-than-expected food prices were a major contributor to April’s uptick. At 6.7% year-on-year (1% month-on-month), the CPI food component came in at the highest level since 2017.

“This is despite two fairly favourable SA agricultural seasons.”

Looking ahead, faster-than-expected food price increases remain a key risk to the inflation outlook,” the Bureau emphasises.

Commenting on last Thursday’s repo rate statement by the Reserve Bank, the Bureau points out that the central bank “deems the risks to the overall inflation outlook to be on the upside rather than balanced as the Monetary Policy Committee judged it to be in March”. Source (FreightNews)