SARB's Mandate and Inflation Target

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Questions and Answers

What is the target range of inflation rate by SARB?

3-6%

What is the current inflation rate according to the text?

5.1%

The SARB has been able to maintain its inflation rate within its target range of 3-6%.

True

What is the global risk to trade due to supply chain constraints and geopolitical tensions?

Increase in energy prices and supply chain instability Signup and view all the answers

What was the growth rate of Real GDP in Q3 of 2023?

-0.2% Signup and view all the answers

What was the growth rate of Real GDP in Q4 of 2023?

0.1% Signup and view all the answers

What is the projected GDP growth in 2024 driven by?

Improved energy supply and improvements in the Transnet rail and port crisis Signup and view all the answers

What is the unemployment rate in Q1 of 2024?

32.9% Signup and view all the answers

What contributed to the increase in unemployment rate?

Agriculture and mining sector Signup and view all the answers

What declined by 7.1% in 2022?

The mining sector Signup and view all the answers

What expanded in Q4 of 2023?

The mining sector Signup and view all the answers

What declined by 9.7% in Q4 of 2023?

The agricultural sector Signup and view all the answers

What was the average CPI in the first half of 2024?

5.3% Signup and view all the answers

What surpassed expectations in November 2023 and January 2024?

Manufacturing and production Signup and view all the answers

What is expected to decrease further?

Fuel prices Signup and view all the answers

What declined in retail sales?

Sales in consumer goods Signup and view all the answers

What is the current food inflation rate?

4.7% Signup and view all the answers

What is expected to increase above the inflation target rate?

Electricity prices Signup and view all the answers

What was the decision made by the MPC?

To decrease the repurchase rate by 25 basis points Signup and view all the answers

What is the current status of the rand?

It is amongst the least performing currencies among developing economies Signup and view all the answers

Study Notes

SARB Mandate

SARB maintains inflation rate within target range of 3-6%, currently at 5.1%.
Aim to stabilize inflation at a midpoint of 4.5% by stimulating investment and consumer spending.
Focus on promoting economic growth while maintaining price stability to protect purchasing power and living standards.

Global Trade and Economic Outlook

High risk on global trade due to shipping traffic in Suez and Panama Canals.
Supply chain constraints and geopolitical tensions threaten global trade stability, potentially increasing energy prices.
Real GDP contracted by 0.2% in Q3 2023 but grew by 0.1% in Q4 2023, hindered by domestic constraints and underperformance in primary sectors.

Unemployment

Unemployment rate rose from 32.1% in 2023 to 32.9% in Q1 2024.
Agriculture and mining sectors significantly contribute to elevated unemployment levels.

Mining and Agriculture Sector

Mining sector experienced a 7.1% decline in 2022 due to power outages and supply constraints, but expanded in Q4 2023 with increased production of platinum group metals, coal, chromium ore, and diamonds.
Agricultural sector fell by 9.7% in Q4 2023 due to loadshedding, high fuel costs, logistics issues, and animal diseases.

Manufacturing and Production

Manufacturing performance exceeded expectations with a 1.9% rise in November 2023 and a further 2.6% increase in January 2024.

Inflation Outlook

CPI in the first half of 2024 averaged 5.3%, reflecting service, food, and fuel price inflation, driven by rand volatility and rising global prices.
Fuel prices predicted to decrease despite geopolitical tensions, influenced by a stronger rand and lower international oil prices.

Retail Sales and Food Prices

Decline in retail sales linked to reduced consumer goods sales.
Food inflation decreased from 5.1% in March 2024 to 4.7% in April 2024, down from a peak of 14% in March 2023, with essential items like bread and eggs costing less.

Electricity Prices and Exchange Rate

Electricity prices anticipated to rise above the inflation target rate.
The rand is one of the lowest performing currencies in developing economies, slightly appreciating against the US dollar but remains volatile.

Monetary Policy Decision

MPC reduced the repurchase rate by 25 basis points.
Lower levels of loadshedding and a stronger rand are expected to drive economic growth.
Decreased petrol prices could help align inflation with the midpoint target.
Lower interest rates may boost domestic and foreign investment, leading to economic stimulus and increased consumer spending.

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Description

This quiz assesses your understanding of the South African Reserve Bank's (SARB) mandate and its role in maintaining inflation rates. Learn about SARB's targets and goals for promoting economic growth and price stability.