CPI for August printed 3;5% year-on-year from 3.7% year-on-year in July and in line with consensus at expectation of 3,6%. The Rand appreciation was evident in the goods component and the services components remains sticky above the inflation target range. Interestingly the spill over from the electricity tariff increases was less than expected.

PPI for August increased to 7,8% year-on-year from 7.7% year-on-year in July versus consensus expectation of 7,4%. The higher than expected number was due to increases in the mining category which has no direct impact on CPI. Agricultural food prices were robust, pointing to higher consumer food prices going forward.

Private sector credit extension increased by 3% year-on-year in August versus 2% year-on-year in July. The data reflects a continued recovery in household lending. Corporate credit demand has improved slightly but still remains subdued.

The SARB's Monetary Policy Committee (MPC) will meet in November to decide on interest rates. The forward rate agreement (FRA) market signals a slight probability that the MPC will cut interest rates but a vast number of economists think a rate cut is unlikely.

CPI for May was up 4.6% year-on-year in line with consensus expectation from 4.8% year-on-year in April. Goods prices inflation continued to exert downward pressure on inflation which can largely be attributed to the weak consumer demand environment. Services inflation remains sticky at 6.5% year on year as it's closely linked to wage inflation.

PPI for May increased by 6.8% year-on-year from 5.5% year-on-year in April due to higher commofity prices. Weak consumer demand conditions could put pressure on producer's margins and hence their ability to pass higher costs onto the consumer.

Private sector credit extension for May grew at a rate of 0.8% versus a negative -0.86% year-on-year in April. This could be an early signal that the bottom of the credit cycle may have been reached but banks are still risk averse and consumers are deleveraging their balance sheets. The money supply increased by 1.4% year on year in May from 1.7% year-on-year in April. The SARB's Monetary Policy Committee will meet in July to decide on interest rates. The FRA curve suggests that interest rates will possibly remain unchanged for the remainder of 2010 and only increase in 2011.

CPI for February printed 5,7% year on year from 6.2% year on year in Januay and in line with the consensus expectation. Inflation seems to be moderately coming in below the upper target range of 6% after it edged higher for the last 2 months.

PPI growth in Februay was 3.5% year on year (consensus 2.1 %) from 2.7% year on year in Januay. This rise was mainly due to the base effects and indicates upward momentum which is not good for inflation.

Private sector credit extension growth in February was -0.6% year on year (consensus -1.1 %) from a revised -0.7% year on year in January. The risk of demand side inflationary pressures on the economy seems to be very low. The money supply for February rose by 0.1% from 0.6% year on year in January.

South African bonds rallied several basis points after the SARB's Monetary Policy Committee announced a 50 basis point cut in the repo rate to 6,5%. The FRA curve rallied by approximatly 40 basis points and indicates that rates will be hiked in 2011.

CPI came in at 5.8% year-on-year, below consensus expectations, from 5.9% year-on-year in October. CPI has printed below the upper target of 6% for the second month in a row and is likely to breach the upper range in the coming month due to base effects.

The PPI contracted at -1.2% year-on-year in November compared to -3.3% year-on-year in October with the rate of price declines less than the consensus expectation of -1.9%. Private sector credit extension came in at -1.59% year-on-year in November from 0.4% year-on-year in October. This number was worse than the consensus of -1.4% year-on-year reflecting an economy that is very weak. The money supply for November rose by 0.58% year-on-year compared to 2.7% year-on-year in October.

The December meeting was cancelled and the Monetary Policy Committee will revert back to its bi-monthly schedule in 2010. The first Monetary Policy Committee meeting for 2010 will be held in the last week of January. The FRA curve expects rates to be held steady for the next few quarters and expecting rate hikes towards the end of 2010.