The upcoming week brings a flurry of important local economic data releases, including the delayed January consumer price index (CPI) figures, producer price index (PPI), private sector credit extension (PSCE) and merchandise trade data.
On Wednesday, Stats SA will release January’s CPI data, originally scheduled for last week.
Lisette IJssel de Schepper from the Bureau for Economic Research (BER) said, “The January release is the first to incorporate the update to the basket and weights following the Income and Expenditure Survey 2022/23 released last month.”
Lara Hodes from Investec projects headline inflation to have risen to 3.3% year on year in January up from 3% in December, with a month-on-month increase of 0.4%.
“The petrol price increase of 12c/l in January will have added little to the monthly outcome, however a more substantial increase was implemented in February (82c/l), which will add upwards inflationary pressure,” Hodes said.
“January is a busy survey month with a number of price adjustments for the year made.”
Nedbank economists forecast a slightly higher CPI increase of 3.4% year on year, attributing the rise mainly to fuel price movements.
“During the month, the petrol price increased by 0.6% month on month, reducing the year-on-year rate of decline to a shallower 4.5% from 10.2%. The monthly increase mainly reflected the impact of higher oil prices.”
They noted that Brent crude oil rose 4% in January, which outweighed the modest appreciation of the rand against the dollar.
“As a result, transport costs will increase by 0.1% year on year after three consecutive months of deflation.”
Food inflation is expected to have accelerated to 2.4% from 1.7% previously, “mainly due to base considerations,” according to Nedbank.
The bank’s economists also highlighted upward price pressures in miscellaneous items surveyed in January, including building and household insurance, gym fees, funeral expenses and policies.
On Thursday Stats SA will publish January’s PPI data, which measures factory gate inflation.
IJssel de Schepper expects a slight acceleration in the annual headline print.
Hodes forecasts PPI inflation to have risen by 0.4% month on month, translating to a year-on-year increase of 1.0%, up from 0.7% in December.
“The contribution from the coke, petroleum, chemical, rubber and plastic products grouping (in which fuel price dynamics are captured) is projected to be marginal. However, upward pressure from some of the other components of the PPI basket are anticipated,” she said.
Nedbank economists share a similar view, projecting PPI to also have increased to 1% in January.
“As with CPI, higher fuel and food prices will drive the upturn,” they noted.
The usual batch of month-end data will be released on Friday. In December 2024, PSCE increased 3.83% year on year, easing from a 4.16% rise the previous month.
This marked the 42nd consecutive month of credit growth but the slowest pace since July.
Hodes expects PSCE growth to have picked up to about 4.5% year on year in January, up from 3.8% in December, largely due to base effects, though she expects a month-on-month decline in corporate credit demand.
Nedbank economists are slightly more optimistic, projecting PSCE annual growth to reach 5% in January.
“Growth in loans and advances likely improved to 4.8% from 4.2% over the same period,” they said.
Corporate loans are expected to have driven this increase while household loan growth likely remained subdued.
“The year-on-year rise in corporate loan growth will be boosted by the low base established last year when the growth rate came in at 2.6%,” Nedbank noted, adding that corporate loan growth is projected to have risen to 6.8% in January after remaining steady at 5.4% in the previous two months.
Household credit demand, however, is forecast to remain muted at about 3%, constrained by persistently high interest rates.
Also on Friday, the SA Revenue Service will release January’s merchandise trade data.
In December, the trade surplus narrowed to R15.5bn from R34bn in November. The decline was driven by an 11.2% month-on-month drop in exports to R160bn, while imports edged lower by 1.1% to R144.6bn.
For full-year 2024, the preliminary trade balance posted a surplus of R196.1bn, up from R130bn in 2023.
Looking ahead, Hodes expects the trade balance to have shifted into a deficit of about R7bn in January.
“January normally sees a seasonal decline in export activity. Moreover, while global manufacturing conditions overall improved in January, activity remains subdued in the eurozone, a key trading partner.
“The HCOB Eurozone Manufacturing index remained in contractionary territory at the start of 2025. Moreover, domestic challenges continue to hinder optimal export potential,” she said.
Nedbank concurs with the expected deterioration but believes downside risks to exports may be limited.
“The downside on exports should be contained by the ongoing rally in the gold price,” the bank’s economists noted.
“On the other hand, imports likely edged higher on improving domestic demand, given low inflation, rising real incomes, and easing interest rates.”
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.