The US-Mexico-Canada trade deal is expected to result in increased local content in the auto sector and will grant US producers access to Canada’s 3.5% dairy market RMB economist Mpho Tsebe explained in a market update.
“However, the deal is only scheduled to be signed after 30 November. Nonetheless, the agreement shows that Trump is unlikely to go for a full-blown global trade war,” she said.
Tsebe also noted the record high fuel prices, announced by the Department of Energy on Monday, the hike which comes into effect at midnight will push the retail petrol price to over R17/litre.
“Fuel prices have reached an all-time high and will weigh on household spending. Higher fuel prices are likely to push the SARB’s (South African Reserve Bank’s) inflation forecast higher, resulting in a breach of the 3% to 6% target band,” she explained.
“Fuel prices could also begin to weigh on food prices due to increased transportation costs. This would prompt the SARB to raise interest rates to curtail inflationary pressures. We maintain our view of one 25bp hike by the end of 2018.”