Economics Weekly – 18 November 2016

Week ahead

· SA: September retail trade sales bounced back to 1.4% y/y after registering no growth in August. The month-on-month rate also recovered 0.6%, but growth for the quarter contracted by -0.2% q/q.
· SSA: The Bank of Zambia kept their policy rate unchanged at 15.5% this week, while Nigeria headline inflation soared to 18.3% y/y in October.
· Global: Global inflation remained elevated in October. In the UK a weaker pound has resulted in rising import costs which has begun to filter through to higher inflation (0.9% y/y), while increasing energy prices pushed inflation higher in the US (1.6% y/y) and the Eurozone (0.5% y/y).

Local / Rounding –up 3Q data

Inflation should have reaccelerated in October, rising 6.3% y/y from 6.1% in September. With few surveys conducted in October—recreation is the only component that is surveyed over the month food and transport inflation should have been the main drivers behind the rise in inflation. Food inflation is expected to have maintained its upward trajectory rising 11.8% y/y while the 41 cents increase in petrol prices should translate into a 4.6% rise in the transport component.

October Producer Price Inflation should show a slight moderation from the 6.6% recorded in September, assisted by the deceleration in agriculture inflation that started in the 2H16 along with a moderation of intermediate manufactured goods. However, relatively high mining and utilities inflation may limit the rate of improvement in The Week Ahead Source: Bloomberg (“Survey” is the consensus forecast) headline inflation.

The Quarterly Labour Force Survey should paint a rather bleak picture of the labour market. If there is any improvement in the unemployment rate it will likely be due an expansion in discouraged work seekers—the expanded definition of unemployment will be closer to the truth. The economy has struggled to create jobs for some time and, as such, we do not expect any improvement anytime soon.

Read more here: Economics Weekly 18th of November 2016