Interest rate expected to remain unchanged

File: The Reserve Bank meets to set monetary policy this week.

JOHANNESBURG - South Africa’s Monetary Policy Committee will announce its interest rates decision on Thursday.

Analysts are expecting the Reserve Bank to leave the repo rate unchanged at 7 percent.

At the same time, there was some reprieve for consumers as inflation dropped marginal in August.

Consumers are under pressure from high food prices.

Food inflation is high because of the prolonged effects of the drought and the weakness in the rand earlier in the year.

The price of bread, maize meal, meat and milk have all increased.

Food and non-alcoholic beverages inflation has come in at 11.3 percent for August, year on year.

Food prices rose slightly by 11.6 percent year-on-year from 11.5 percent in July.

Food carries a 14 percent weight in the CPI basket.

Petrol and energy were unchanged at 5.7 percent, year-on-year.

The Reserve Bank meets to set monetary policy this week.

There are two main factors it will consider when making the interest rate decision.

Inflation is one. It's at the upper end of the 3 to 6 percent target band.

Weak economic growth is the other.

In setting interest rates, the bank considers the outlook for inflation in the coming 12 to 18 months.

Inflation has fallen since peaking at 7 percent in February, partly helped by the stronger rand which is up about 12 percent against the dollar so far this year.

The Monetary Policy Committee will announce on Thursday any changes to the prime lending rate of 10.25 percent.