South Africa: SA Reserve Bank Poised to Hike Repo Rate This Week to Douse Inflationary Flames

The Monetary Policy Committee of the South African Reserve Bank will almost certainly hike its key repo rate on Thursday, 24 March, in the face of surging food and fuel price pressures. The only question is by how much.

When the Monetary Policy Committee (MPC) of the South African Reserve Bank (Sarb) last met in January, Ukrainian cities were not smouldering ruins and alarm bells were not ringing about Black Sea grain and Russian oil exports. Still, the inflation outlook was hardly rosy.

“The risks to the inflation outlook are assessed to the upside. Global producer price and food price inflation continued to surprise higher in recent months and could do so again,” the MPC noted in its January statement.

Global producer price and food inflation have certainly “continued to surprise higher” since, not least because of Russian President Vladimir Putin’s invasion of Ukraine.

Brent crude prices were around $82 a barrel when the MPC met in January and they have since soared to as high as almost $130 and remain well above $100. South African retail petrol prices are now at record highs above R21 a litre. US maize prices have surged by more than 20% since the last…