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The May print came in slightly lower than our forecast of 6.4% and the Thomson Reuters consensus of 6.5%. The slowdown was largely because of a sharper-than-expected decline in food and non-alcoholic beverages inflation to 11.8% y/y in May from 13.9% in April, effectively shaving 0.4pp off headline inflation.
Core CPI inflation edged lower by 0.1pp to 5.2% y/y, in line with consensus but lower than our forecast of an unchanged print. We expect headline CPI inflation to ease into the target range, reaching 5.5% in June and ending the year at 4.9%. Moreover, the company see the May CPI data as consistent with our expectation that the SARB will keep the repo rate on hold until March next year. For details, see South Africa May CPI: Headline inflation slightly softer than expected (21 June 2023).
Eskom expects further slight improvement in the energy availability factor in the short term.
In its latest weekly system status update, the power utility notes that it expects the energy availability factor to average 59.3% of total installed capacity in the week ending 25 June, slightly better than the 57.7% in the week before. The expected improvement mainly reflects a reduction in planned maintenance from 9.5% (of capacity) to 6.8%, offsetting some deterioration in unplanned outages from 31.7% to 32.4%. Somewhat weaker electricity demand also appears to be helping to reduce the intensity of load shedding.
Eskom data show that peak demand was 30133MW in the week ending 18 June compared with 31218MW in the week before and 31665MW in the corresponding week last year. In the current week, peak demand has averaged 31157MW, nearly 2000MW less than the average of the corresponding week last year. Eskom is currently implementing Stage 3 load shedding daily from 16h00 to midnight.
