"I think this situation should stabilise - unless there is a major global crisis - and for the inflation rate to come down," he tells OFM News. 

A lower inflation rate will result in a lower interest rate. 

With the Consumer Price Index (CPI) statistics recently published, inflation has increased by 0.1%, making it 7.5%. Van Niekerk says he had predicted the inflation price would increase with more than the 0.1% with which it has increased.

He explains the CPI as the measure of the inflation rate. "The CPI represents the basket of consumer goods and services that people make use of or purchase on a monthly basis. The CPI would measure the value of those products and how they will change from month to month, and the value change is the percentage of inflation it will grow by," he adds. 

The biggest contributor to the 7.5% is transport, which increased by 17.9% year-on-year and contributed 2.5% to the growth of inflation. Transport is followed by food and non-alcoholic beverages, which increased by 11.9% and contributed 2.0% to the growth.

The third main contributor was housing and utilities, which increased by 4.2% year-on-year and contributed 1.0%. The least contributor is miscellaneous goods and services, which increased by 4.0% year-on-year and contributed 0.6%.

Van Niekerk states that he would have liked to see a decrease in some things after the latest interest hike.

According to the Governor of the Reverse Bank, Lesetja Kganyagos, the interest rate will come down only when there is a significant decrease in the inflation rate.

"This might mean another interest rate hike in the future, or at least a stable interest rate," Van Niekerk explains. 

"We expected food inflation to increase, as it has, and this is because of all the fuel price increases and the import costs," he says. He further explains that the increase in fuel prices over the past months has also been a reason for transport inflation to grow by 17.9%.

"The impact the Transnet strike has had on transport inflation will become visible in next month’s CPI stats." 

He concludes that there is a possibility of the inflation rate dropping by the end of 2022 or in 2023, and that will result in the interest rate also decreasing. 

OFM News