Economists have differing views on the consumer inflation outcome for May, which will be released by Stats SA on Wednesday.
The Bureau for Economic Research (BER) at Stellenbosch University expects an increase, while Nedbank has forecast it to remain the same and Trading Economics a slowdown.
BER expects inflation to rise to 5.5% year on year from 5.2% in April, 5.3% in March and 5.6% in February.
BER economist Tracey-Lee Solomon said the May increase would be on the back of higher food and fuel prices. The Gauteng wholesale price for diesel had a 9.9% year-on-year increase in May after a 7.5% gain in April, but the retail price for petrol eased to a 9.2% year-on-year rise in May from a 9.7% jump in April.
Trading Economics, on the other hand, expects inflation to have slowed to 5%.
The Nedbank Group Economic Unit forecast that May consumer inflation remained steady at 5.2%. Over the month, it expects consumer prices to have increased at a slower rate of 0.2% from 0.3%.
The monthly moderation will mainly result from a slower increase in fuel prices. The price of petrol rose for the fifth consecutive month in May, albeit at a slower 1.5% from 2.7%, reflecting a moderation in the price of Brent crude oil. During the month, the price of Brent crude fell 10% on the easing of concerns that the conflict in the Middle East could pull in other oil-producing nations in the region. This will outweigh the impact of a weaker rand, which depreciated by a monthly 1.3% against a stronger US dollar.
The upward pressure on the monthly consumer price index (CPI) will partly be contained by further moderation in food prices as the base effects on some food components, such as fats and oils, have been diminishing.
Stats SA will release a range of April internal trade data during the week as well as April building plan figures. The BER noted that in the first quarter, the retail and motor trade contracted, while wholesale trade saw positive growth, resulting in a modest 0.1% quarterly expansion in the trade sector. The BER hopes for a better outcome at the start of the second quarter.
Nedbank is not as optimistic and forecast annual growth in retail sales to moderate to 1.5% in April from 2.3% in March. Growth in sales is being driven by weak base effects and the improvement in real incomes as the rate of inflation slows.
Easter was in late March, while last year it was in April, so while it boosted the manufacturing and mining production data, it normally has the opposite effect on the buying side of the economy. However, new-vehicle sales rose 2.2% year on year in April after falling by 11.7% in March. Motor trade data will be released on Thursday.
On the international front, interest rate announcements will be made in Australia, Brazil, China and the UK. In all cases, the consensus forecast is for these central banks to keep their policy rates unchanged.
The usual batch of preliminary purchasing managers’ index (PMI) data for Japan, India, the eurozone, UK and US will follow on Friday, with Trading Economics in most cases expecting an improvement in June compared with May. Trading Economics, for instance, expects a rise to 48.5 in June for the eurozone manufacturing PMI.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.