INFLATION and gross domestic product will dominate a bumper week of economic data releases this week. Attention will be focused on Friday's release of April's consumer price index (CPI) after the surprise delay in the release of the figures last week.
Statistics SA has postponed the release of the figures while it conducts a review of the data, which includes a review of the contentious rental survey. Analysts have pointed out that rental price increases used in CPI are based on an outdated survey, which may be overstating CPIX (CPI less mortgages) by almost 2%.
The Reserve Bank's monetary policy committee meets on June 1112 to decide whether interest rates should be eased, with the market expecting rates to be cut by one percentage point.
While the Bank has been cautious in some of its statements, raising concerns that it may overshoot the inflation target of 3% to 6% next year, a downward revision in the CPI data would allow the Bank to meet its target comfortably next year, economists said.
Evidence that CPI could slow significantly this year also comes from the dramatic slowdown in producer price inflation (PPI), which declined to a four-year low of 5,1% in March.
Last month's PPI figures, which Stats SA will release on Wednesday, is expected to show another sharp deceleration, reflecting the impact of higher interest rates and the stronger rand, which has cut imported inflation.
Economists forecasts for last month's PPI range between 3,1% to 3,9% year-on-year.
"On average, the exchange rate's performance was less stellar in April than in March, but remnants of the lagged impact of its improvement over the preceding 15 months should continue to be evident in milder price increases," said Standard Bank, which is expecting producer prices to have increased by an annual 3,9%.
Pressure has been mounting on the Reserve Bank to cut interest rates sooner rather than later. Exporters are currently struggling, with high interest rates exacerbating the adverse impact on export growth from the rand's strength and declining global demand.
Recent data on manufacturing production already shows a slowdown in growth.
This week's release of first quarter gross domestic product (GDP) which will be released by Stats SA tomorrow will also be keenly watched to give some indication of how resilient the economy has been to adverse external and internal pressures.
Last year GDP grew by an annual 3%, outperforming many of the world's largest economies.
However, in the final quarter last year growth slowed to a seasonally adjusted 2,4% as manufacturing growth began to slide.
Economists expect GDP growth to have dipped below 2% in the first quarter this year, with forecasts ranging between 1,5% and 1,9%.
"The stronger rand, as well as high interest rates, will affect GDP growth in the first quarter. However, it is likely that some sectors took up some of the slack, such as general government services," said PLJ Financial Services chief economist Dawie Roodt.
Economists have cut their forecasts for growth this year from about 3% to 2,5%, mainly due to the rand's strengthening against other major currencies.
"Although the economy is expected to pick up in the second half of this year, it is unlikely that the 3,3% the national treasury has pencilled in for this year will be reached," said Brait economist Colen Garrow.
More inflation data is out on Friday, with the Reserve Bank releasing the latest figures for money supply and private sector credit growth.
Standard Bank expects both to show marginal growth last month, but should not be of much concern since there was "little potential for sharp monetary expansion" while interest rates remained on hold.
Although CPI data released on Friday is likely to be the main focus of the data, economists will also be looking at latest figures for the international trade balance, released later that day, to give some indication of the impact of the stronger rand on exports.
In March, the trade balance narrowed to a surplus of R1,8bn, but stronger growth in imports last month is likely to have reduced the trade balance even further.
May 26 2003 06:54:30:000AM Nasreen Seria Business Day 1st Edition
Publisher: Business Day
Source: Business Day
WEEK AHEAD Inflation and GDP figures to dominate economics data releases
Latest from eProperty News
- Love and property: a homebuying guide for couples
- From Civic Landmark to Collaborative Hub: A New Era for Muizenberg’s Post Office
- Growthpoint breaks ground on Tecoma Park, Cornubia, advancing its local logistics strategy
- Rosebank Mall adds Livo to its lifestyle line-up
- 166 sectional title units in the iconic Parktonian Hotel, located in the heart of Braamfontein, Johannesburg
eProperty News is a leading online commercial property marketplace serving the Southern African Investment, Office, Retail and Industrial property and allied sectors.