US GDP growth in Q2 2024 was 2.8% q/q, well above expectations for 1.9%. About half of this came from growth in inventories and government spending pre-election, which is not necessarily sustainable. Since there is evidence that consumer demand is softening, the underlying dynamic is that US growth is easing but the economy is not moving into recession.

Although SA’s CPI rate for June was above the Reserve Bank’s target at 5.1% y/y, inflation is expected to fall for the remainder of the year, which would allow for an interest rate cut. The main contributors to CPI for the month were a decline in the petrol price (with another due in July); an increase in non-alcoholic beverage prices but not food prices as a whole; and a substantial increase in rental inflation, although on an annual basis rental inflation remains modest.

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