South African Economic Report | Updated to end July 2019 Publication date: 7 August 2019 Next publication: 6 September 2019 South African Economic Report | Updated to end July 2019 INFLATION

South African Economic Report Trade Surplus +R4.4bn Jun 2019 Q1/2019 2018 GDP +4.5 % +5.8% CPI PPI May 2019: CPI +4.5% PPI +6.4% Jun 2019 0.8% Forecast 2019 0.6% (prev. 1.0%) Forecast 2020 -3.2% GDP YTD –R1.9bn Q4/2018: +1.4% 1.8% (unchanged) Trade Deficit Consumer Confidence 5 Q2/2019 Q1/2019: 2 10% Prime Int Rate May 2019: 10.25% % Jul 2019 29% Unemployment Q2/2019 Q1/2019: 27.6% 2.2% May 2019 Retail Trade Sales Apr 2019 (rev.): 2.7% “Government needs to start moving on these structural reforms about which we’ve heard so much.” - Trade Intelligence SOURCE: Ti SA Economic Report

South African Economic Report What is the South African Economic report? Ti’s South African Economic report is a clear and easy-to-read view of the most currently available data for South Africa’s key economic indicators. Produced on a monthly basis by Ti Research, it draws on official information from various public and private institutions. The report is released in the first week of each new month, reporting on the available data up to and including the last day of the previous month. How to read this report Depending on the indicator itself, data is released by the various institutions on a daily, monthly or quarterly basis. The frequency and release date has been indicated at the foot of each slide, next to the data source. These dates are indicative however, since the institutions may publish the data with a delay. Data lag: Data availability varies according to the data source, at times with a lag of a couple of months. e.g. Retail Trade Sales for July 2018 were released with a two-month lag in September 2018 GDP figures for Q2/2018 were released two months after Q2 (i.e. in August 2018) Readers are reminded to bear this data lag in mind when looking for parallels between indicators. It might therefore be necessary to go back to previous months’ reports in order to correctly analyse indicators over the same reporting periods.

South African Economic Report Inflation | Five-year View BASKET WEIGHTING 2008 2012 2016 Food & Non Alc. Bev. 15.7% 15.4% 17.2% Petrol 4.8% 7.3% 4.58% Electricity 1.9% 4.2% 3.8% CPI PPI Apr 19 4.4% 6.5% May 19 4.5% 6.4% Jun 19 4.5% 5.8% CPI and Core Inflation 2016 6.4% (core 5.6%) 5.3% (core 4.8%) 4.6% (core 4.3%) Jun 2019 YoY Core inflation1 +4.3% CPI goods +4.0% CPI services +4.8% Res Bank CPI and Core Inflation Forecast –2019 4.4% (core 4.4%) 2020 5.1% (core 4.7%) 2021 4.6% (core 4.5%) Revised Jul 19 Jun 2019 marks over 27 consecutive months of CPI within target of 3% to 6% Drought conditions in SA saw food prices increase SOURCE: StatsSA | Frequency: Monthly | Release date: 3rd Wednesday of the successive month NOTE: 1Core Inflation = CPI excluding food, non-alcoholic beverages and petrol)

South African Economic Report Inflation | CPI by Category – Three Years Oct 2016: Food and non-alcoholic beverages inflation reaches highest level since Dec 2011 at 11.7% due to drought in SA Aug 18: Personal Care inflation at a 7-year low +0.3% SOURCE: StatsSA | Frequency: Monthly | Release date: 3rd Wednesday of the successive month

South African Economic Report YoY Jun 19: Food 3.2% (LY: 3.1%) (Excl. Non-alcoholic beverages) Inflation | CPI by Food Type 2 of the measured categories of food reported inflation above the upper target band of 6% High inflation this year because last year reported low inflation: Jun 18 Bread and cereal: -3.1% Sugar, sweets and desserts: -5.3% Meat: after four months of deflation SOURCE: StatsSA | Frequency: Monthly | Release date: 3rd Wednesday of the successive month NOTE: Non-alcoholic beverages are not shown in the above

South African Economic Report Inflation COMMENTARY CPI (Consumer Price Index) for Jun 2019 remained at 4.5% (May 4.5% | Apr 4.4% | Mar 4.5%). Food price inflation ticked up while the opposite was true for transport inflation. May 2019 marks 27 consecutive months of inflation below the upper target set by the SARB. Housing and utilities increased (contrib. 1.2%): +4.9% YoY, with water and other services at +10.9% and electricity and other fuels at +6.8% YoY Transport (contrib. 0.8%) +5.5% (May 19: +7.1%) YoY with fuel +7.4% YoY, well below the growth from Oct/Nov 2018 which was in excess of +20% Food and non-alcoholic beverages (contrib. 0.6%) +3.7% YoY, with the inflation of food at a nine-month high of +3.2% 2018’s CPI came out at 4.6% and after July’s MPC meeting, the CPI forecast1 for 2019 indicates inflation will stay within the 3 to 6% target, below the mid-point (4.5%) at 4.4%. There is an expectation that inflation will remain around the mid- point level on a more sustained basis (barring any shocks and assuming exchange rate stability) as demand pressures are subdued, global inflation remains low and wages and rental prices are forecasted to increase only marginally. PPI (Producer Price Index), also known as farm and factory-gate prices, reported lower than last month at +5.8% for Jun 2019 after three months over 6.0% Coke, petroleum, chemical, rubber and plastic products (contrib. 1.9%) with growth +8.3%, petrol lower at +6.2% (May: +11.3%) | diesel +6.2% (May: +10.1%) Food products, beverages and tobacco products (contrib. 1.6%) inflation at +4.8% pushed up by grain product inflation PPI is sensitive to the fluctuations in the fuel price SOURCE: 1 South African Reserve Bank

Carey Leighton | Associate Economic Analyst