This report covers the key domestic and international data releases over the past week. The more comprehensive BER Weekly Review (Enhanced Version) includes a detailed discussion on the main economic events and developments over the past week, a summary of upcoming data (the week ahead) and the BER’s forecast for key economic indicators. The full Weekly is only available to BER Essential Insights subscribers (sign up here – it’s only R210/month and you geDt more benefits) and BER Premium Insights clients.

DOMESTIC DATA

Nomvelo Moima  

CONSUMER INFLATION UPTICK TEMPERED BY SOFTER FOOD PRICE INCREASES

Headline consumer inflation (CPI) quickened to 3.4% y-o-y in September, from 3.3% in August. This was in line with consensus (but lower than our expectations). Contributing about a third of the increase in the headline reading, housing and utilities (4.5% y-o-y) largely drove the uptick. Food and non-alcoholic beverages prices were also up 4.5% y-o-y in September, but after a 5.7% acceleration in August, price growth has eased considerably in this category. This marks the first easing in food price pressures in five months, indicating that the recent surge has reached its peak.

On a monthly basis, headline CPI increased by 0.2% m-o-m in September, following a 0.1% decline in the prior month. Meanwhile, core inflation, which excludes food and energy costs, accelerated slightly to 3.2% y-o-y from 3.1% in the prior month.

Lastly, the SARB’s Composite Leading Business Cycle Indicator registered a third consecutive month of expansion, rising by 1.6% in August following a 0.9% increase in July. So far, marking the strongest reading this year. Eight out of ten components showed growth, with the largest positive contributions being increases in the number of residential building plans passed and the six-month smoothed growth rate in job advertisement space. This offset a drag from a decline in the RMB/BER Business Confidence Index, and a narrowing of the SA-US interest rate spread.

REFORM MONITOR

Roy Havemann

GOVERNMENT RELEASES NEW PLAN FOR ENERGY PROVISION

The Government released the new Integrated Resource Plan (IRP) at the end of last week, which will be gazetted today (24 October). The IRP envisages the following energy split by 2039: 

Source: Dept of Energy and Electricity, Windaba presentation 

Importantly, the amended Electricity Regulation Act requires the Minister to “develop, publish and periodically review an indicative integrated resource plan for electricity generation.” This is a shift from the previous system, where the IRP needed to be followed. This, however, appeared to be contradicted by the Minister’s speech at the launch, which highlighted that “state will lead, market will follow”, and a number of references to the role of state institutions. 

Residential solar systems, including grid-tied parallel-connected systems, can now be certified/signed off by a Department of Labour registered person (Installation Electricians and Master Installation Electricians). Previously, a registered electrical engineer was required to sign off on this installation at a significant cost (up to R20 000). This will reduce the cost of installing solar systems at home. 

FATF GREY LIST ANNOUNCEMENT EXPECTED TODAY

The announcement regarding the Financial Action Task Force (FATF) grey-listing is scheduled for later today. Expectations are that South Africa will leave the grey list after being placed on it in February 2023. The process has been long, but has led to significant improvements in the coordination between the prosecuting authorities, the anti-money-laundering authorities and the justice department and National Treasury. The challenge will be to maintain momentum. 

INTERNATIONAL DATA

Nadia Matulich

CHINESE GDP SLOWS RELATIVE TO THE FIRST HALF OF THE YEAR

Several data releases came out of China this week, the most notable being Q3 GDP, which grew by 4.8% y-o-y, down from 5.2% in Q2. As expected, growth slowed after a strong first half of the year, weighed down by ongoing US tariff tensions, a sluggish property market and weak consumer demand. Yet, exports performed better than expected as firms redirected sales to new markets. At the same time, some pre-holiday spending ahead of the Mid-Autumn Festival (“Golden Week”) provided a temporary boost to growth.

UK INFLATION MISSES EXPECTATIONS BY REMAINING FLAT

In the UK, annual CPI inflation for September came in below consensus expectations (4%) at 3.8%, unchanged from August. Core inflation was also below consensus (3.7%), coming in at 3.5% (August: 3.6%). The biggest upward driver was transport, led by higher motor fuel and airfare costs (up from 2.4% in August to 3.8% in September). Recreation and culture saw the largest decline (3.2% in August to 2.7% in September), followed by food and non-alcoholic beverages (5.1% to 4.5%).

EU AND EURO AREA CONSUMER CONFIDENCE TICKS UP ONCE MORE

In Europe, the flash estimate of consumer confidence for October improved for the second consecutive month, rising by 0.8 points to -13.5 in the EU and by 0.7 points to -14.2 in the Eurozone.