JOHANNESBURG, Nov 20 (Reuters) – South Africa’s annual inflation rate slowed sharply to 2.8% in October, data showed on Wednesday, setting the stage for another interest rate cut by the central bank this week.

Statistics South Africa said falling fuel prices were the primary driver of the slowdown in the headline rate from 3.8% in September.

October’s reading is the lowest inflation has been since June 2020, during the peak of the COVID-19 pandemic.

Independent economist Elize Kruger said fuel and food price developments play a greater role in October, which is considered a low survey month.

South Africa’s government-regulated petrol and diesel prices fell by more than one rand a litre in October.

Economists polled by Reuters had forecast inflation would slow to 3.1%, well below the 4.5% level the South African Reserve Bank (SARB) aims for but just within the bank’s 3%-6% target range.

The SARB will announce its next interest rate decision on Thursday.

A Reuters poll published last week predicted the central bank would lower its repo rate by 25 basis points (bps), the same size of cut as in September, when the SARB cut rates for the first time in more than four years.

“Given recent SARB rhetoric, the recent rand depreciation and a conservative (monetary policy) committee, a 25 bps cut remains the base case forecast,” Kruger said.

(Reporting by Bhargav Acharya, Kopano Gumbi and Tannur Anders; Editing by Alexander Winning)