The FNB House Price Index growth averaged 0.8% y/y in December, marginally higher than the 0.7% in November (revised from 0.5%), and a low of 0.5% in October.
As 2024 ended, we knew that the new year would sustain uncertainty and volatility in line with unfolding global fracturing. We were also worried about which campaign promises would materialise in a Trump 2.0 presidency, and we figured that policy uncertainty was sufficiently high, but the way it has been heightened further is unprecedented. The market gyrations over the past few weeks highlight how chaotic the environment has become.
We have made modest adjustments to our macroeconomic projections following the release of the 4Q24 quarterly bulletin. The updated forecasts incorporate the anticipated impact of the proposed VAT increase, fiscal drag, and the associated decline in consumer confidence. Additionally, we have assessed the implications of ongoing United States (US) trade policy recalibration and the potential exclusion from the African Growth and Opportunity Act (AGOA), identifying downside risks to our macroeconomic outlook. We estimate a potential drag on real GDP growth ranging from 0.1 percentage points (ppts) to 0.4ppts.
After troughing at 2.1% y/y in May 2020, due to a lockdown-driven fall in demand and statistical imputations, headline inflation accelerated to 5.2% y/y in May of 2021. CPI weights are typically updated at least every five years, in line with international standards. New weights will be introduced with the January 2022 data and the base year will change to December 2020.
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