Business Report’s  Ethel Hazelhurst:

“Confirmation came on Friday that the 4.5 percentage point rise in interest rates over the past two years is finally yielding results. Data released by the Reserve Bank showed that credit growth slowed sharply over the 12 months to April. Over the past few months, the declining trend is reflected most clearly in credit extended to the household sector.

The monthly increase in household borrowing has dwindled since the start of the year, from R58.7 billion in January to R15.9 billion in February, R9.7 billion in March and R3.2 billion in April.

Colen Garrow, an economist at Brait, said corporate borrowing was also falling. Growth in “other loans and advances”, which includes overdrafts, dropped from 29.5 percent in the 12 months to March to 25.2 percent in April.

Garrow said this category represented about a third of total credit to the private sector.

If not for the high cost of oil and food, the new data would have paved the way for a reversal in the interest rate rising cycle.

But economists said the latest credit figures would not stop the monetary policy committee from raising interest rates further, probably by a full percentage point, when it meets on June 12, because of inflationary pressure from input costs. Short-term interest rates, which jumped sharply on the release of alarming inflation data last week, remained high on Friday.”

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