Inflation lower in February, but hefty increases in some items on the way

Highlights _________________________________________________________________________________

February’s year-on-year (y/y) headline inflation rate declined to 2,9% in February from 3,2% in January.
Month-on-month (m/m) inflation rose by 0,7% in February compared to 0,3% in January.
The main drivers behind February’s monthly increase were the fuel and medical insurance categories, while meat, housing, water and electricity, new vehicles and medical insurance contributed most to the y/y increase.
Core inflation subsided to 2,6% y/y (3,3% in January), while it increased 0,6% m/m compared to 0,1% in January.
Core inflation will grow more important as an indicator to gauge the strength of second round inflation.
The Monetary Policy Committee (MPC) of the South African Reserve Bank (SARB) will likely keep the repo rate unchanged at its next meeting and throughout 2021.