Expection was 12.90%?? Annual CPIX inflation rose to 13.0% y/y in July (June 11.6% y/y), virtually in line with expectations (of 12.9% y/y). Electricity, food and transport were key drivers on the month; · Global food prices rose 46.6% y/y in July and, combined with high domestic costs of manufactured food, pushed SA's food price inflation rate to 18.5% y/y; · The fuel price rose by 74c/litre in July. A 27c/litre cut occurred in August and a potential cut of R1/litre is being scheduled for September, which will provide a lot of relief to the inflation outcome in that month; · Despite today's publication of a record high CPIX inflation figure, next year's re-weighting exercise will result in a lower level of consumer inflation as it removes a lot of the previous inflationary pressure from rising food, petrol and electricity prices. In addition, the mortgage interest rate component of CPI will be done away with, replaced by the income which can be charged for renting out homes instead of living in them. By definition, CPIX inflation would potentially fall away. Whether CPIX inflation would be replaced by CPI inflation as the targeted measure is uncertain, it is even possible that total country CPI could be targeted instead. The new measure to be targeted is likely to be announced at November's MTBPS; · We expect no more interest rate hikes this year. The sharp drop in the level of inflation in 2009 is likely to cause the SARB to cut interest rates significantly, beginning with a 50bp easing at the April MPC meeting.