Reduced consumer spending slows credit growth to 18.6%
October 1, 2008
By Mike Cohen and Nasreen Seria
Cape Town - Credit growth eased to an annual 18.6 percent last month, the slowest pace in more than three years, as higher interest rates curbed consumer spending on cars and furniture.
Growth in borrowing by households and companies slowed from 19.8 percent in July, the central bank said yesterday. Credit was expected to rise 19.2 percent, according to the median estimate of 16 economists surveyed by Bloomberg.
The Reserve Bank has raised its benchmark interest rate by 3 percentage points to 12 percent since June last year.
The slowdown in credit demand might ease pressure on inflation, increasing chances that the bank would leave rates unchanged next Thursday.
“All indicators are pointing to the fact that interest rates have peaked,” said Nicky Weimar, an economist at Nedbank Group. “Rates will probably remain on hold for the rest of this year and probably into next year.”
The rand fell to R8.2970 against the dollar.
Retail sales dropped by a record 4.6 percent in July, the statistics office said last week. Vehicle sales slumped 30 percent last month, the biggest drop in 14 years.
The broad M3 measure of money supply rose an annual 15.4 percent last month compared with 18.5 percent in July, the central bank said. That was lower than the 17.4 percent median forecast by 14 Bloomberg economists. - Bloomberg
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