Inflation dips below 4% for the first time in over three years

South Africa’s annual inflation rate fell below 4% for the first time in more than three years, bolstering the case for policymakers to continue cutting rates.

Consumer prices rose 3.8% in September, compared with 4.4% in the prior month, Pretoria-based Statistics South Africa said Wednesday in a statement on its website. That matched the median of 15 economists’ estimates in a Bloomberg survey.

The drop in the rate to the lower end of the central bank’s 3% to 6% target range, along with expectations that it may fall further, will likely persuade officials to cut the policy benchmark for the second time in a row on November 21. A favourable food harvest and soft fuel prices are factors that are expected to help inflation slow further.

Forward rate agreements, used to speculate on borrowing costs, are pricing in a 92% chance of a 25-basis-point cut in November.

The central bank in its biannual monetary policy review published last week said that while its policy stance is moderately restrictive and the disinflation process is on track, there’s lingering uncertainty about the outlook that requires the authorities to proceed with caution.