GROWTH in demand for credit by the private sector slowed to 25,81% in the year to December from 26,77% in the year to November, official data showed today.

During the same period, the broadly defined M3 measure of money supply grew by 21,93%, also lower than forecasts, from November’s 25,33%. Economists said this, together with recent softer than expected inflation data, lessened the likelihood of further monetary tightening when the Reserve Bank meets next month.

The slowdown in December was the second in as many months after credit growth demand rose by a record 27,48% in October.

"Both numbers are slightly better than we expected, but it is not a big difference. It is still a very strong rate of increase," said Dawie Roodt, an economist at Efficient Research.

But he said: "Given the good inflation data recently, chances are pretty good that the Reserve Bank will leave rates unchanged."

A Reuters poll of 10 economists forecast that December private sector credit growth would slow to 25,95%.

The Bank raised its repo rate by 200 basis points to 9% in four stages last year and will meet next month to decide on the next move. Reserve Bank governor Tito Mboweni had previously warned that debt levels were worrying.

Faster economic growth in the economy has been driven largely by domestic demand, but spending has pushed household debt to a record 73% of disposable income, adding to inflationary pressures.

Domestic consumption has also boosted demand for imports, piling pressure on a widening current account deficit of more than 5% of gross domestic product. But some analysts believe official figures last week showing a slowdown in consumer and producer inflation has lowered the risk of another rate increase at next month’s monetary policy committee meeting.