South Africa's manufacturing sector remains susceptible to renewed weakness in the global economy, particularly in the euro area, through possible declines in exports, South African Reserve Bank said in its 2012 annual economic report on Monday.
The upward momentum in inflation started reversing early in 2012, slowing to 5.7 percent in May, it said.
Despite the recent moderation in domestic consumer food price inflation, food prices are expected to remain elevated during the remainder of the year due to cost-push pressures arising from elevated transport costs, high electricity and refrigeration costs, and wage increases, the bank noted.
The central bank last week reduced its key interest rate for the first time in more than one-and-a-half year to 5 percent, citing increased downside risks to the economy due to the global economic slowdown.
by RTT Staff Writer
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