July inflation surprised to the downside at 4% yoy (vs. the market at 4.3%). Given the global backdrop and event risks, we see nominal rand depreciation continuing. However, the upside risks from rand depreciation are offset by weak growth (weighing on core inflation) and muted imported inflation (supported by weak growth driving global decline in commodity prices). We see average 2019 inflation at 4.2% and average 2020 inflation at 4.7% (end-2020 at 4.6%). We also see downside risks to our growth forecast for 2020 that suggest further downside to our 2020 inflation forecast. (more…)
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