<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="4564" height="2776" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/7ASWQJJB7FJFVDHIOUFPVXUYDA.avif" alt="" class="wp-image-567383"/><figcaption class="wp-element-caption">A technician works on the cables of a high voltage electricity transmission pylon from the Kiambere hydroelectric dam in Embakasi district of Nairobi, Kenya January 12, 2022. REUTERS/Monicah Mwangi/File Photo</figcaption></figure>



NAIROBI, Dec 18 (Reuters) &#8211; Kenya suffered a widespread power outage on Wednesday that affected most of the country, with electricity supply restored about six hours later, the nation&#8217;s leading power utility Kenya Power said.



The cause of the outage in East Africa&#8217;s largest economy, which was first reported at 1:28 a.m. local time (1028 GMT), has yet to be determined, Kenya Power said in a post on social media platform X.



As of 7:35 a.m. local time (0435 GMT), power had been restored in the areas where it had gone off, the company said.



Wednesday&#8217;s outage was the latest in a series of recurring power outages the country has faced over the past year.



Kenya Power supplies power to more than 9.6 million customers in Kenya, according to its website.



The blackout has significantly reduced internet connectivity across the country, said Netblocks, a global observatory that monitors internet access.



The outage also affected neighbouring Tanzania, the observatory added in a post on X.



(Writing by Bate Felix and George Obulutsa; Editing by Nicholas Yong and Abinaya Vijayaraghavan)

7ASWQJJB7FJFVDHIOUFPVXUYDA

Power supply restored after major outage hits Kenya, affects internet access

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108076833-1734433401543-gettyimages-1981155057-q1015064_nluf1lrf-820x462.png" alt="" class="wp-image-567109" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108076833-1734433401543-gettyimages-1981155057-q1015064_nluf1lrf-820x462.png 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108076833-1734433401543-gettyimages-1981155057-q1015064_nluf1lrf-300x169.png 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108076833-1734433401543-gettyimages-1981155057-q1015064_nluf1lrf-160x90.png 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108076833-1734433401543-gettyimages-1981155057-q1015064_nluf1lrf-768x432.png 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108076833-1734433401543-gettyimages-1981155057-q1015064_nluf1lrf.png 1480w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A worker prepares a flight of drinking chocolate for a customer at Katherine Anne Confections, an artisanal chocolate shop and cafe on February 02, 2024 in Chicago, Illinois. Scott Olson | Getty Images News | Getty Images</figcaption></figure>



The price of chocolate’s key ingredient has skyrocketed this year, prompting analysts to issue fresh warnings about extreme price volatility.



Cocoa futures for March delivery in New York traded as much as 1% higher at $11,938 per metric ton on Tuesday, notching yet another record high. It has since pared some of those gains, trading at $11,864 at around 8:20 a.m. ET.



The benchmark contract, which hit an all-time intraday high of $11,925 in the previous session, is up over 180% year-to-date.



It comes amid renewed concerns about adverse weather conditions and supply tightness in West Africa, home to around three-quarters of the world’s cocoa production.



Strategists at Dutch bank ING said persistent tightness in cocoa and coffee markets, coupled with weather uncertainty, meant that prices were likely to remain volatile through next year.



The global cocoa market registered its largest deficit in over 60 years in the 2023-2024 marketing year, ING said in a research note, citing data from the International Cocoa Organization (ICCO). It attributed this shortfall to crop failures in Ivory Coast and Ghana, the world’s largest cocoa producers.



“While prospects for the 2024/25 marketing year are looking better, there are still concerns over weather developments in West Africa and what it could mean for output this season,” Warren Patterson, head of commodities strategy at ING, said in a note published Dec. 11.



“Forecasts currently show that West African output – which accounts for more than 70% of global output – will edge higher. However, there are risks to this due to recent poor weather,” he continued.



Looking ahead, Patterson said prices were likely to remain historically elevated next year, which will be necessary “to keep a lid on demand.”



<h2 class="wp-block-heading" id="h-commodity-markets-remain-very-dangerous"><a></a>Commodity markets remain ‘very dangerous’</h2>



Like cocoa, coffee prices have also soared in 2024, with analysts recently warning it could take years for one of the world’s most traded commodities to recover.



Rabobank’s Carlos Mera singled out cocoa and coffee as commodities of interest to professional traders, although cautioned that commodity markets remain “very volatile” and “very dangerous.”



″[Cocoa] is one of the most obscure commodities so I wouldn’t advise anyone that doesn’t know to go in there but certainly it is one of the most fun commodities to look at,” Mera told CNBC’s “Squawk Box Europe” on Tuesday.



“And then coffee, we have another spike. Coffee has hit its highest price since 1977 [and] depending on which contract you look [at], it might be a historical record and record robusta prices as well … It is quite an interesting situation,” he added.

108076833-1734433401543-gettyimages-1981155057-q1015064_nluf1lrf

Cocoa prices climb to new record high, prompting fresh warnings about extreme volatility

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/OJZAWNCDYNP53FRARPVL4BQUAI-820x547.jpg" alt="" class="wp-image-567071" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/OJZAWNCDYNP53FRARPVL4BQUAI-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/OJZAWNCDYNP53FRARPVL4BQUAI-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/OJZAWNCDYNP53FRARPVL4BQUAI-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/OJZAWNCDYNP53FRARPVL4BQUAI-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/OJZAWNCDYNP53FRARPVL4BQUAI-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/OJZAWNCDYNP53FRARPVL4BQUAI-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">FILE PHOTO: Ethiopia&#8217;s Parliament members listen to Prime Minister Abiy Ahmed, as he addresses them on the current situation of the country, at the Parliament Building in Addis Ababa, Ethiopia, October 31, 2024. REUTERS/Tiksa Negeri/File Photo</figcaption></figure>



ADDIS ABABA, Dec 17 (Reuters)&nbsp;&#8211;&nbsp;Ethiopia&#8217;s parliament passed long-planned legislation on Tuesday allowing foreign banks to operate in the Horn of Africa country, part of government efforts to attract more overseas investment.



The country has been gradually opening up its tightly controlled economy, which is one of Sub-Saharan Africa&#8217;s biggest, since Prime Minister Abiy Ahmed took over in 2018.



However, a two-year civil war, slow progress with reforms and a foreign exchange crunch have deterred investors.



In June, the cabinet approved the draft law, which allows foreign banks to establish subsidiaries, open branches or representative offices, and buy shares in local banks.



Ownership of local banks by foreign strategic investors will be capped at 40%, a copy of the law seen by Reuters showed.



Ethiopia&#8217;s banking sector is currently dominated by state-owned Commercial Bank of Ethiopia.



Parliament overwhelmingly backed the banking law, although a handful of opposition lawmakers expressed concern that local banks would not be able to compete with foreign competitors.



The governor of Ethiopia&#8217;s central bank, Mamo Mihretu, said competition would instead strengthen local lenders.



Ethiopia, with more than 120 million people, is one of the most populous on the African continent and has long been in the sights of foreign investors after being shut off for decades.



It secured an International Monetary Fund support programme in July, hours after it followed one of the Fund&#8217;s key recommendations and floated its birr currency.



Other reforms linked to the negotiations for an IMF programme included the adoption of an interest rate-based monetary policy regime.



(Reporting by Dawit Endeshaw; Writing by Elias Biryabarema; Editing by Alexander Winning and Alexander Smith)

FILE PHOTO: Ethiopia’s Prime Minister Abiy Ahmed addresses the Parliament members

Ethiopia passes law allowing foreign banks to operate

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108075021-1734011164475-gettyimages-1456167226-gitech84-820x461.jpeg" alt="" class="wp-image-566950" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108075021-1734011164475-gettyimages-1456167226-gitech84-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108075021-1734011164475-gettyimages-1456167226-gitech84-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108075021-1734011164475-gettyimages-1456167226-gitech84-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108075021-1734011164475-gettyimages-1456167226-gitech84-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108075021-1734011164475-gettyimages-1456167226-gitech84-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108075021-1734011164475-gettyimages-1456167226-gitech84-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">China is focusing on large language models (LLMs) in the artificial intelligence space.  Blackdovfx | Istock | Getty Images</figcaption></figure>



China’s attempts to dominate the world of artificial intelligence could be paying off, with industry insiders and technology analysts telling CNBC that Chinese AI models are already hugely popular and are keeping pace with — and even surpassing — those from the U.S. in terms of performance.



AI has become the latest battleground between the U.S. and China, with both sides considering it a strategic technology. Washington continues to restrict China’s access to leading-edge chips designed to help power artificial intelligence amid fears that the technology could threaten U.S. national security.



It’s led China to pursue its own approach to boosting the appeal and performance of its AI models, including relying on open-sourcing technology and developing its own super-fast software and chips.



<h2 class="wp-block-heading" id="h-china-is-creating-popular-llms"><a></a>China is creating popular LLMs</h2>



Like some of the leading U.S. firms in the space, Chinese AI firms are developing so-called large language models, or LLMs, which are trained on huge amounts of data and underpin applications such as chatbots.



Unlike OpenAI’s models which power the hugely popular ChatGPT, however, many of these Chinese companies are developing open-source, or open-weight, LLMs which developers can download and build on top of for free and without stringent licensing requirements from the inventor.



On Hugging Face, a repository of LLMs, Chinese LLMs are the most downloaded, according to Tiezhen Wang, a machine learning engineer at the company. Qwen, a family of AI models created by Chinese e-commerce giant Alibaba, is the most popular on Hugging Face, he said.



“Qwen is rapidly gaining popularity due to its outstanding performance on competitive benchmarks,” Wang told CNBC by email.



He added that Qwen has a “highly favorable licensing model” which means it can be used by companies without the need for “extensive legal reviews.”



Qwen comes in various sizes, or parameters, as they’re known in the world of LLMs. Large parameter models are more powerful but have higher computational costs, while smaller ones are cheaper to run.



“Regardless of the size you choose, Qwen is likely to be one of the best-performing models available right now,” Wang added.



DeepSeek, a start-up, also made waves recently with a model called DeepSeek-R1. DeepSeek said last month that its R1 model competes with OpenAI’s o1 — a model designed for reasoning or solving more complex tasks.



These companies claim that their models can compete with other open-source offerings like&nbsp;<a href="https://www.cnbc.com/quotes/META/">Meta</a>’s Llama, as well as closed LLMs such as those from OpenAI, across various functions.



“In the last year, we’ve seen the rise of open source Chinese contributions to AI with really strong performance, low cost to serve and high throughput,” Grace Isford, a partner at Lux Capital, told CNBC by email.



<h2 class="wp-block-heading"><a></a>China pushes open source to go global</h2>



Open sourcing a technology serves a number of purposes, including driving innovation as more developers have access to it, as well as building a community around a product.



It is not only Chinese firms that have launched open-source LLMs. Facebook parent Meta, as well as European start-up Mistral, also have open-source versions of AI models.



But with the technology industry caught in the crosshairs of the geopolitical battle between Washington and Beijing, open-source LLMs give Chinese firms another advantage: enabling their models to be used globally.



“Chinese companies would like to see their models used outside of China, so this is definitively a way for companies to become global players in the AI space,” Paul Triolo, a partner at global advisory firm DGA Group, told CNBC by email.



While the focus is on AI models right now, there is also debate over what applications will be built on top of them — and who will dominate this global internet landscape going forward.



“If you assume these frontier base AI models are table stakes, it’s about what these models are used for, like accelerating frontier science and engineering technology,” Lux Capital’s Isford said.



Today’s AI models have been compared to operating systems, such as Microsoft’s Windows, Google’s Android and Apple’s iOS, with the potential to dominate a market, like these companies do on mobile and PCs.



If true, this makes the stakes for building a dominant LLM higher.



“They [Chinese companies] perceive LLMs as the center of future tech ecosystems,” Xin Sun, senior lecturer in Chinese and East Asian business at King’s College London, told&nbsp;CNBC&nbsp;by email.



“Their future business models will rely on developers joining their ecosystems, developing new applications based on the LLMs, and attracting users and data from which profits can be generated subsequently through various means, including but far beyond directing users to use their cloud services,” Sun added.



<h2 class="wp-block-heading"><a></a>Chip restrictions cast doubt over China’s AI future</h2>



AI models are trained on vast amounts of data, requiring huge amounts of computing power. Currently,&nbsp;<a href="https://www.cnbc.com/quotes/NVDA/">Nvidia</a>&nbsp;is the leading designer of the chips required for this, known as graphics processing units (GPUs).



Most of the leading AI companies are training their systems on Nvidia’s most high-performance chips — but not in China.



Over the past year or so, the U.S. has ramped up export restrictions on advanced semiconductor and chipmaking equipment to China. It means Nvidia’s leading-edge chips cannot be exported to the country and the company has had to create sanction-compliant semiconductors to export.



Despite, these curbs, however, Chinese firms have still managed to launch advanced AI models.



“Major Chinese technology platforms currently have sufficient access to computing power to continue to improve models. This is because they have stockpiled large numbers of Nvidia GPUs and are also leveraging domestic GPUs from Huawei and other firms,” DGA Group’s Triolo said.



Indeed, Chinese companies have been boosting efforts to create viable alternatives to Nvidia. Huawei has been one of the leading players in pursuit of this goal in China, while firms like Baidu and Alibaba have also been investing in semiconductor design.



“However, the gap in terms of advanced hardware compute will become greater over time, particularly next year as Nvidia rolls out its Blackwell-based systems that are restricted for export to China,” Triolo said.



Lux Capital’s Isford flagged that China has been “systematically investing and growing their whole domestic AI infrastructure stack outside of Nvidia with high-performance AI chips from companies like Baidu.”



“Whether or not Nvidia chips are banned in China will not prevent China from investing and building their own infrastructure to build and train AI models,” she added.

108075021-1734011164475-gettyimages-1456167226-gitech84

China wants to dominate in AI — and some of its models are already beating their U.S. rivals

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="1080" height="720" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/3ZBREFEEMBMVNIDF57IIH75RYU.avif" alt="" class="wp-image-565676"/><figcaption class="wp-element-caption">FIA President Mohammed Ben Sulayem talks to Rwanda&#8217;s President Paul Kagame during the FIA General Assembly at the Kigali Convention Center, in Kigali, Rwanda December 13, 2024. REUTERS/Jean Bizimana</figcaption></figure>



KIGALI, Dec 13 (Reuters)&nbsp;&#8211;&nbsp;Rwandan president Paul Kagame announced his country&#8217;s bid for a Formula One race on Friday, ahead of an awards ceremony in the capital Kigali that will hand the champion&#8217;s trophy to Max Verstappen for a fourth year in a row.



Formula One has not raced in Africa since the last South African Grand Prix was held at Kyalami, north of Johannesburg, in 1993.



&#8220;I am happy to formally announce that Rwanda is bidding to bring the thrill of racing back to Africa by hosting a Formula One Grand Prix,&#8221; Kagame said in an opening address to the governing FIA&#8217;s General Assembly.



&#8220;A big thank you to (Formula One chief executive) Stefano (Domenicali) and the entire team at F1, for the good progress in our discussions so far.



&#8220;I assure you that we are approaching this opportunity with the seriousness and commitment which it deserves. Together we will build something we can all be proud of.&#8221;



Domenicali said in August that Rwanda wanted to host a race at a permanent circuit.



Media reports say the track, to be designed by a company run by Austrian former F1 racer Alexander Wurz, would be&nbsp;near a new international airport under construction at Bugesera some 40km from Kigali.



Seven-times world champion Lewis Hamilton also said in August that the time was right for a race in Africa.



&#8220;The time&#8217;s 100% right. We can&#8217;t be adding races in other locations and continue to ignore Africa, which the rest of the world just takes from. No one gives anything to Africa,&#8221; said the Briton.



&#8220;I think having a Grand Prix there will really be able to highlight just how great the place is and bring in tourism and all sorts of things. Why are we not on that continent?&#8221;



The FIA is holding its general assemblies in Africa for the first time and the FIA&#8217;s Emirati President Mohammed Ben Sulayem and Rwanda&#8217;s Sports Minister Richard Nyirihishema met earlier in Kigali.



&#8220;To be here in Rwanda for such an important moment in the FIA’s calendar is a testament to the strength of this nation, in particular its growing influence in motorsport,&#8221; said Ben Sulayem.



&#8220;We are aligned on our values and shared goals across key sectors such as innovation, sustainability, and road safety, and I look forward to our continued partnership. The future of motorsport in Africa is bright.&#8221;



Verstappen is also carrying out &#8216;work of public interest&#8217; in Rwanda as punishment for swearing in a Singapore Grand Prix press conference in October.



The activity involves an Affordable Cross Car built locally in Rwanda from blueprints provided by the&nbsp;FIA.



Kagame has won praise from Western and regional leaders for helping to end the 1994 genocide in Rwanda and rebuilding the country into an attractive destination for investment and aid.



But he also stands accused of a brutal crackdown on critics at home, and supporting the M23 rebel group in neighbouring Democratic Republic of Congo, who rights groups say are guilty of killings, rapes and other apparent war crimes.



He has repeatedly denied the allegations.



(Writing by Alan Baldwin in London, additional reporting by Hereward Holland in Nairobi, editing by Christian Radnedge)

3ZBREFEEMBMVNIDF57IIH75RYU

Rwandan president announces bid for F1 race

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="541" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/06/E2LAHPZEEFN6VLWP7WHSXPENYQ-820x541.jpg" alt="" class="wp-image-425628" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/06/E2LAHPZEEFN6VLWP7WHSXPENYQ-820x541.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/06/E2LAHPZEEFN6VLWP7WHSXPENYQ-300x198.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/06/E2LAHPZEEFN6VLWP7WHSXPENYQ-136x90.jpg 136w, https://cms.cnbcafrica.com/wp-content/uploads/2023/06/E2LAHPZEEFN6VLWP7WHSXPENYQ-768x507.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/06/E2LAHPZEEFN6VLWP7WHSXPENYQ-1536x1013.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/06/E2LAHPZEEFN6VLWP7WHSXPENYQ-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">FILE PHOTO: The logo of South Africa&#8217;s central reserve bank is seen during the delivery of a keynote address by South Africa&#8217;s central bank governor, Lesetja Kganyago, at the University of the Witwatersrand in Johannesburg, South Africa, November 1, 2022. REUTERS/Siphiwe Sibeko/File Photo</figcaption></figure>



PRETORIA, Dec 13 (Reuters)&nbsp;&#8211;&nbsp;South Africa recorded foreign direct investment outflows of 3.2 billion rand ($179.87 million) in the third quarter, compared to inflows of 16.6 billion in the second quarter, central bank data showed on Friday.



The South African Reserve Bank (SARB) said in its Quarterly Bulletin that the outflows were due to domestic subsidiaries of multinational companies paying back their loans to the parent companies.



For the first time in two years, portfolio investments recorded inflows of 45.6 billion rand in July-September, from outflows of 20.1 billion rand in the second quarter.



Nthabiseng Molemoeng, head of balance of payments at the SARB, said the inflows were mainly due to an increase in foreign purchases of publicly traded government bonds following eight consecutive quarters of equity outflows.



&#8220;I think it was just a general decline in investor sentiment towards emerging markets,&#8221; she said. &#8220;Now with this quarter the inflow is mainly from debt securities.&#8221;



($1 = 17.7908 rand)



(Reporting by Kopano Gumbi, Editing by Bhargav Acharya)

FILE PHOTO: South Africa’s central bank governor to delivers keynote address

South Africa shifts to FDI outflows in third quarter, central bank says

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108074907-1733992205729-gettyimages-2161859444-AFP_364E4TQ-820x461.jpeg" alt="" class="wp-image-565548" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108074907-1733992205729-gettyimages-2161859444-AFP_364E4TQ-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108074907-1733992205729-gettyimages-2161859444-AFP_364E4TQ-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108074907-1733992205729-gettyimages-2161859444-AFP_364E4TQ-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108074907-1733992205729-gettyimages-2161859444-AFP_364E4TQ-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108074907-1733992205729-gettyimages-2161859444-AFP_364E4TQ-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108074907-1733992205729-gettyimages-2161859444-AFP_364E4TQ.jpeg 1600w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A coffee cup with a printed message from Salvadoran President Nayib Bukele’s X account is pictured at Franco’s Pupusa restaurant in San Salvador on July 17, 2024. Marvin Recinos | Afp | Getty Images</figcaption></figure>



A record-breaking rally for coffee prices shows no sign of slowing down, analysts say, with some warning it could take years for one of the world’s most traded commodities to recover.



Arabica coffee futures with March delivery hit a fresh intraday high of 348.35 cents per pound on Tuesday, notching their highest level in nearly 50 years. The contract has since cut some of its gains but remains up a whopping 70% year-to-date.



The last time the price for arabica beans, the world’s most popular variety, traded that high was in 1977 when snow destroyed large areas of Brazilian plantations.



Renowned for their smooth taste and sweet flavor, arabica beans make up between 60% to 70% of the global coffee market. They are commonly used in espressos and other barista-made coffee.



Drought and high temperatures, alongside a global reliance on supplies from relatively few regions, are regarded as the primary drivers for the recent price rise.



Robusta futures, meanwhile, also climbed to a fresh record high in late November. Robusta beans are known for their strong and bitter flavor and are typically used in instant blends.



The extraordinary price rally for coffee, which is considered the second-most traded commodity by volume, after crude oil, comes amid concerns over the 2025 crop in Brazil, by far the world’s largest producer.



“The country experienced its worst drought in 70 years during August and September, followed by heavy rains in October, raising fears that the flowering crop could fail,” Ole Hansen, head of commodity strategy at Denmark’s Saxo Bank, said in a research note published Tuesday.



For some, the poor growing weather in Brazil means it could take a long time for coffee prices to unwind.



“History suggests that coffee prices will only ease back as and when supply improves and stocks are replenished,” David Oxley, chief climate and commodities economist at Capital Economics, said in a research note published on Nov. 29.



“Crucially, this is a process that can take years, not months,” Oxley said.



<h2 class="wp-block-heading" id="h-coffee-particularly-vulnerable-to-bad-weather"><a></a>Coffee ‘particularly vulnerable’ to bad weather</h2>



A staple beverage for billions of people across the world, demand for coffee has been boosted in recent years by growing consumption in China. Production, however, has struggled to keep up.



“Like cocoa, coffee is grown in a relatively narrow tropical band, with key producers including Brazil, Vietnam, Colombia, and Ethiopia,” Saxo Bank’s Hansen said.



“This concentration makes it particularly vulnerable to adverse weather conditions, especially in Brazil and Vietnam, which together account for approximately 56% of global production,” he added.



The U.S. Department of Agriculture said in its semi-annual report last month that it expects Brazil’s coffee production for the marketing year 2024/2025 to come in at 66.4 million (60 kilogram per bag) comprising of 45.4 million bags of arabica and 21 million of robusta.



The USDA said its forecast reflected a 5.8% drop from its previous projection, attributing the decrease to irregular weather patterns that negatively affected crop development, particularly for arabica trees.



“In Brazil, this will be the fifth consecutive arabica harvest that is disappointing because of adverse weather,” Carlos Mera, head of agricultural commodities markets at Dutch lender Rabobank, told CNBC via video call.



Asked whether the climate crisis appears to be amplifying the risks for coffee production, Mera said it was difficult to measure accurately, but there are growing concerns across the industry that extreme weather could prevent typical growth in coffee trees.



Looking ahead, Mera said coffee prices “can certainly go even higher” from their current record levels.



<h2 class="wp-block-heading"><a></a>Price increases for coffee drinkers?</h2>



For coffee drinkers, analysts say it is practically inevitable that coffee makers will need to pass on the costs to consumers in order to limit the impact of higher bean prices on their bottom line.



Nestlé, the world’s biggest coffee maker, which owns leading brands including Nescafé and Nespresso, said last month that it would continue raising prices and making packs smaller to offset the impact of higher prices.



“Like every manufacturer, we have seen significant increases in the cost of coffee, making it much more expensive to manufacture our products,” a Nestlé spokesperson told CNBC via email.



“As always, we continue to be more efficient and absorb increasing costs where possible whilst maintaining the same high quality and delicious taste that consumers know and love,” they added.



Italian coffee maker Lavazza and U.S. coffee giant Starbucks both declined to comment when contacted by CNBC.

108074907-1733992205729-gettyimages-2161859444-AFP_364E4TQ

Coffee prices climb to near 50-year highs — and it may take years for the rally to run out of steam

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="5000" height="3488" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/FHAFUN3FDVOOFH6LJMRBKOX2FI.avif" alt="" class="wp-image-565245"/><figcaption class="wp-element-caption">Wilted maize crops are seen in Mumijo, Buhera district, east of capital Harare, Zimbabwe, March 16, 2024. REUTERS/Philimon Bulawayo/File Photo</figcaption></figure>



CHIVI, Zimbabwe, Dec 12 (Reuters) &#8211; Zimbabwe appears to be heading into another dry spell that could worsen hunger for millions of people already suffering from an El Nino-induced drought, the U.N. World Food Programme said on Thursday.



The drought in Southern Africa that started early this year has been the worst in decades and prompted Zimbabwe and neighbouring countries to declare a state of disaster over food shortages.



Rainfall was forecast to resume in October, which is normally the start of a six-month rainy season. But so far Zimbabwe has received only a few days of rain in late November.



&#8220;We are worried. You can see the ground in front of us is bone dry,&#8221; said World Food Programme country director Barbara Clemens during a food distribution event in Chivi, southern Zimbabwe.



Families in the district are already skipping meals to preserve the little food they have.



Georgina Maphosa, 74, said she feared worse hunger next year after the maize crop she planted in late November failed to germinate.



&#8220;I can now afford to eat once a day. I had hoped that this season would be better, but my early crop is already a write-off,&#8221; said Maphosa, who woke up at 5:00 am to queue for food handouts.



More than half of Zimbabwe&#8217;s population of 16 million was in need of food aid this year, the government said in May.



Zimbabwe has failed to feed itself since 2000, when former president Robert Mugabe led land reforms that disrupted production, while climate change has worsened the country&#8217;s ability to grow enough food.



(Editing by Nellie Peyton; Editing by David Goodman)

FHAFUN3FDVOOFH6LJMRBKOX2FI

Zimbabwe at risk of another dry season after El Nino drought, says WFP

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="515" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/09/NKYFZRFDD5MS5NQEZSVZ6PYNTI-1-820x515.jpg" alt="" class="wp-image-526361" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/09/NKYFZRFDD5MS5NQEZSVZ6PYNTI-1-820x515.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/09/NKYFZRFDD5MS5NQEZSVZ6PYNTI-1-300x189.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/09/NKYFZRFDD5MS5NQEZSVZ6PYNTI-1-143x90.jpg 143w, https://cms.cnbcafrica.com/wp-content/uploads/2024/09/NKYFZRFDD5MS5NQEZSVZ6PYNTI-1-768x483.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/09/NKYFZRFDD5MS5NQEZSVZ6PYNTI-1-1536x965.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/09/NKYFZRFDD5MS5NQEZSVZ6PYNTI-1-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">FILE PHOTO: Shoppers are seen outside the Shoprite store at the Garden City mall along Thika Road in Nairobi, Kenya November 13, 2020. REUTERS/Thomas Mukoya/File Photo</figcaption></figure>



JOHANNESBURG, Dec 12 (Reuters)&nbsp;&#8211;&nbsp;South African analysts, business people and trade unions have lowered their inflation expectations through to 2026, taking them to the midpoint of the central bank&#8217;s inflation target range, a quarterly survey showed on Thursday.



The findings are likely to encourage the South African Reserve Bank (SARB) to forge ahead with its monetary easing cycle, potentially by cutting interest rates in larger increments.



The fourth-quarter survey conducted by the Bureau for Economic Research found that the average inflation forecast of analysts, business people and labour unions was for headline consumer inflation of 4.6% in 2024, 4.5% in 2025 and 4.6% in 2026.



That is down from average forecasts of 5.1%, 4.8% and 4.8% in the third-quarter survey and the lowest expectations have been in more than three years.



The SARB likes to see inflation around 4.5%, the midpoint of its 3% to 6% target band.



It has lowered its main lending rate by 25 basis points (bps) at each of its last two meetings.



But some analysts believe there is room for a 50 bp cut at the next policy meeting in January.



Data on Wednesday showed headline consumer inflation stood at 2.9% year on year in November, below the target band for the second month in a row thanks to food inflation slowing to its lowest level in almost 14 years.



(Reporting by Kopano Gumbi; Editing by Alexander Winning, Kirsten Donovan)

Shoppers are seen outside the Shoprite store at the Garden City mall along Thika Road in Nairobi

South African inflation expectations fall to midpoint of central bank range

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="485" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/SZDJDME5EFNDPN4BZJHAQQVVFM-820x485.jpg" alt="" class="wp-image-565145" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/SZDJDME5EFNDPN4BZJHAQQVVFM-820x485.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/SZDJDME5EFNDPN4BZJHAQQVVFM-300x178.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/SZDJDME5EFNDPN4BZJHAQQVVFM-152x90.jpg 152w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/SZDJDME5EFNDPN4BZJHAQQVVFM-768x455.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/SZDJDME5EFNDPN4BZJHAQQVVFM-1536x909.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/SZDJDME5EFNDPN4BZJHAQQVVFM-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">FILE PHOTO: Somali women gather to march against the Ethiopia-Somaliland port deal at the Yarisow stadium in Mogadishu, Somalia January 3, 2024. REUTERS/Feisal Omar/File Photo</figcaption></figure>



ANKARA, Dec 11 (Reuters)&nbsp;&#8211;&nbsp;Somalia and Ethiopia&nbsp;said they would&nbsp;work together to resolve a dispute over Addis Ababa&#8217;s plan to build a port in the breakaway region of Somaliland, which had drawn in regional powers and threatened to further destabilise the Horn of Africa.



The two countries&#8217; leaders said they had agreed to find commercial arrangements to allow landlocked Ethiopia &#8220;reliable, secure and sustainable access to and from the sea&#8221; after talks on Wednesday mediated by Turkish President Tayyip Erdogan.



The meeting was their first since January when Ethiopia said it would lease a port in Somalia&#8217;s breakaway northern region of Somaliland in exchange for recognising the area&#8217;s independence.



Mogadishu rejected the deal and threatened to expel Ethiopian troops who were stationed in Somalia to fight Islamist insurgents.



Somalia opposes international recognition of Somaliland, which has governed itself and enjoyed comparative peace and stability since declaring independence in 1991.



In a joint statement released late on Wednesday, Somalia and Ethiopia said they had agreed to start technical negotiations by the end of February next year, and to conclude them within four months.



They did not go into detail.



&#8220;This joint declaration focuses on the future, not the past,&#8221; Erdogan said at a press conference in Ankara afterwards.



Somalia&#8217;s President Hassan Sheikh Mohamud said he was ready to work with Ethiopia, while Ethiopian Prime Minister Abiy Ahmed welcomed Turkish efforts to resolve the dispute.



The spat has drawn Somalia closer to Egypt, which has quarrelled with Ethiopia for years over Addis Ababa&#8217;s construction of a vast hydro dam on the Nile River, and to Eritrea, another of Ethiopia&#8217;s longtime foes.



Turkey has close ties with both Ethiopia and Somalia, training Somalia&#8217;s security forces and supplying development assistance in return for a foothold on a key global shipping route.



(Reporting by Hereward Holland, Ezgi Erkoyun, Huseyin Hayatsever, Abdi Sheikh, Dawit Endeshaw and Tuvan Gumrukcu; Writing by Hereward Holland; Editing by Keith Weir and Kate Mayberry)

FILE PHOTO: Somali women gather to march against the Ethiopia-Somaliland port deal, in Mogadishu

Somalia, Ethiopia agree to work together to resolve Somaliland port dispute

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/TW73TLV2SBLINDR3RCPU2BLTCE-820x547.jpg" alt="" class="wp-image-548180" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/TW73TLV2SBLINDR3RCPU2BLTCE-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/TW73TLV2SBLINDR3RCPU2BLTCE-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/TW73TLV2SBLINDR3RCPU2BLTCE-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/TW73TLV2SBLINDR3RCPU2BLTCE-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/TW73TLV2SBLINDR3RCPU2BLTCE-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/TW73TLV2SBLINDR3RCPU2BLTCE-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">FILE PHOTO: A view of the newly-commissioned Dangote Petroleum refinery in Ibeju-Lekki, Lagos, Nigeria May 22, 2023. REUTERS/Temilade Adelaja/File Photo</figcaption></figure>



ABUJA, (Reuters) &#8211; Nigeria&#8217;s Dangote Refinery said on Wednesday it has made its first export of petrol to Cameroon, a milestone that could pave way for regional energy integration and help stabilise fuel prices across the region.



The 650,000 barrel refinery built by Nigerian billionaire Aliko Dangote in Lagos aims to compete with European refiners when operating at full capacity and is expected to change trading of refined products in the Atlantic basin.



The company&nbsp;did not provide&nbsp;details&nbsp;of how much was exported.



Cameroon&#8217;s energy firm Neptune Oil said in the statement that both companies were exploring new initiatives to establish a reliable supply chain that will help stabilize fuel prices and opportunities across the region.



Neptune Oil said the petrol supply transaction was executed without intermediaries.



(Reporting by MacDonald Dzirutwe; Writing by Chijioke Ohuocha. Editing by Jane Merriman and Diane Craft)

FILE PHOTO: A view of the newly-commissioned Dangote Petroleum refinery in Ibeju-Lekki, Lagos

Nigeria’s Dangote Refinery makes first petrol export to Cameroon

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/107308954-1695982808104-gettyimages-1664665862-US-CPI-AUGUST-820x461.jpeg" alt="" class="wp-image-564863" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/107308954-1695982808104-gettyimages-1664665862-US-CPI-AUGUST-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/107308954-1695982808104-gettyimages-1664665862-US-CPI-AUGUST-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/107308954-1695982808104-gettyimages-1664665862-US-CPI-AUGUST-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/107308954-1695982808104-gettyimages-1664665862-US-CPI-AUGUST-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/107308954-1695982808104-gettyimages-1664665862-US-CPI-AUGUST-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/107308954-1695982808104-gettyimages-1664665862-US-CPI-AUGUST.jpeg 1858w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Customers shop at a supermarket in Foster City, California, the United States, Sept. 13, 2023. Xinhua News Agency | Xinhua News Agency | Getty Images</figcaption></figure>



Consumer prices rose at a faster annual pace in November, a reminder that inflation remains an issue both for households and policymakers.



The consumer price index showed a 12-month inflation rate of 2.7% after increasing 0.3% on the month, the Bureau of Labor Statistics reported Wednesday. The annual rate was 0.1 percentage point higher than October.



Excluding food and energy costs, core CPI was at 3.3% on an annual basis and 0.3% monthly. The 12-month core reading was unchanged from a month ago.



All of the numbers were in line with the Dow Jones consensus estimates.



The readings come with Federal Reserve officials mulling over what to do at their policy meeting next week, Markets strongly expect the Fed to lower its benchmark short-term borrowing rate by a quarter percentage point when the meeting wraps up Dec. 18, but then skip January as they measure the impact successive cuts have had on the economy.



The report further solidified the outlook for a cut, with traders raising the odds to 99%, according to the CME Group’s FedWatch measure. Odds of a January cut also edged higher, hitting about 23%.



“In-line core inflation clears the way for a rate cut at next week’s [Federal Open Market Committee] meeting,” said Whitney Watson, global co-head and co-CIO for fixed income at Goldman Sachs Asset Management. “Following today’s data the Fed will depart for the holiday break still confident in the disinflation process and we think it remains on course for further gradual easing in the new year.”



While inflation is well off the 40-year high it saw in mid-2022, it remains above the Fed’s 2% annual target. Some policymakers in recent days have expressed frustration with inflation’s resilience and have indicated that the pace of rate cuts may need to slow if more progress isn’t made.



If the Fed follows through with a cut next week, it will have taken a full percentage point off the federal funds rate since September.



Much of the November increase in CPI came from shelter costs, which rose 0.3% and have been one of the most stubborn components of inflation. Fed officials and many economists expect housing-related inflation to ease as new rental leases are negotiated, but the item has continued to increase each month.



The BLS estimated that the shelter item, which has about a one-third weighting in the CPI calculation, accounted for about 40% of the total increase in November. The shelter index rose 4.7% on a 12-month basis in November.



Used vehicle prices rose 2% monthly while new vehicle prices increased 0.6%, reversing the recent trend that has seen those items come down.



Elsewhere, food costs rose 0.4% monthly and 2.4% year over year, while the energy index increased 0.2% but was down 3.2% annually.



The increase in the CPI meant that average hourly earnings for workers were basically flat for the month when adjusted for inflation, but increased 1.3% from a year ago, the BLS said in a separate release.

107308954-1695982808104-gettyimages-1664665862-US-CPI-AUGUST

Annual U.S. inflation rate accelerates to 2.7% in November, as expected

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="5000" height="3333" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/WHPPRFAEWVI2PAWUHJUMPQXPVA.avif" alt="" class="wp-image-564860"/><figcaption class="wp-element-caption">United Nations Secretary-General Antonio Guterres attends a joint statement with Portuguese Prime Minister Luis Montenegro (not pictured), in Sao Bento Palace, Lisbon, Portugal, November 27, 2024. REUTERS/Pedro Nunes/File Photo</figcaption></figure>



JOHANNESBURG, Dec 11 (Reuters)&nbsp;&#8211;&nbsp;United Nations Secretary-General Antonio Guterres said on Wednesday that existing debt relief mechanisms were far from adequate to address global vulnerabilities, calling on the Group of Twenty nations to do more to deliver financial justice.



Guterres made the comments during a visit to South Africa, which became the first African country to lead the G20 when it took the helm of the international forum of developed and developing economies this month.



The G20&#8217;s &#8220;Common Framework&#8221;, a debt relief architecture launched during the COVID-19 pandemic to help heavily-indebted countries get back on track quickly, has been criticised following slow restructurings in countries including Zambia.



&#8220;I recognise all the efforts the G20 has made in relation to the so-called &#8216;Framework&#8217;, but let&#8217;s be clear. We are far from having an instrument able to address the debt problem that exists at global level,&#8221; Guterres told a G20 event in Johannesburg.



&#8220;We need meaningful solutions to address the debt crisis, so countries can invest in meeting the basic needs of their people and drive long-term development.&#8221;



Guterres also used his speech to G20 sherpas and finance officials to underscore that global governance institutions needed to be reformed to serve African countries better.



He said there should be an enhanced role for multilateral development banks and greater concessional funding, but that boosting gross domestic product should not be the only targeted metric.



&#8220;It&#8217;s very important to look especially also at vulnerability,&#8221; Guterres said.



South African Finance Minister Enoch Godongwana told the same event that addressing debt vulnerabilities would be a focus of his country&#8217;s G20 presidency.



South Africa will propose creating an expert panel to focus specifically on Africa&#8217;s financing needs, he said, adding that &#8220;debt sustainability cannot be solved through the Common Framework alone&#8221;.



(Additional reporting by Tannur Anders and Bhargav Acharya. Writing by Alexander Winning. Editing by Mark Potter)

WHPPRFAEWVI2PAWUHJUMPQXPVA

UN chief says debt relief tools far from adequate

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="720" height="469" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/I7JNEWQ4GVLM3NU76F6XVVSAV4.avif" alt="" class="wp-image-564821"/><figcaption class="wp-element-caption">People walk on the street around Kwame Nkrumah circle in Accra, Ghana, December 2, 2016. Picture taken December 2, 2016. REUTERS/Luc Gnago/File Photo</figcaption></figure>



ACCRA, Dec 11 (Reuters)&nbsp;&#8211;&nbsp;Ghana&#8217;s economic growth quickened in the third quarter in a further sign of the west African country&#8217;s ongoing recovery from its worst economic crisis in a generation, statistics agency data showed on Wednesday.



Gross domestic product grew by 7.2% year-on-year in the third quarter of 2024, the most since the second quarter of 2019, the data showed.



The positive economic momentum comes as a new president and government prepare to take office on Jan. 7 after ex-president and main opposition leader John Dramani Mahama won Saturday&#8217;s election.



Growth in the second quarter of 2024 was revised to 7.0% from 6.9%, the agency said.



Ghana&#8217;s industrial sector, largely driven by mining and quarrying, grew by 10.4%, while the services sector expanded by 6.4% and the agricultural sector by 3.2%.



The cocoa sector in the world&#8217;s second biggest producer, however, contracted for the fifth consecutive quarter by 26%, the data showed.



Ghana defaulted on most of its external debt in 2022, leading to a painful restructuring.



Its cedi currency has been strengthening, but high inflation and government debt sustainability remain a concern for investors.



(Reporting by Maxwell Akalaare Adombila and Christian Akorlie; Writing by Anait Miridzhanian; Editing by Alex Richardson and Bernadette Baum)

I7JNEWQ4GVLM3NU76F6XVVSAV4

Ghana’s economy grew 7.2% in third quarter in recovery from crisis

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="720" height="471" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/08/SA-INFLATION.avif" alt="" class="wp-image-524647"/><figcaption class="wp-element-caption">Shoppers look for items as they shop at an outlet of retailer Checkers in Sandton City mall, in Sandton, South Africa, August 28, 2024. REUTERS/Lelethu Madikane </figcaption></figure>



JOHANNESBURG, Dec 11 (Reuters)&nbsp;&#8211;&nbsp;South Africa&#8217;s&nbsp;inflation rate&nbsp;rose less than expected in November,&nbsp;staying&nbsp;just below the central bank&#8217;s target range&nbsp;thanks to food inflation slowing&nbsp;to its lowest level in almost 14 years.



Headline consumer inflation was 2.9% year on year in November from 2.8% in October. In month-on-month terms, inflation was at 0.0% in November, compared with -0.1% in October, Statistics South Africa data showed.



Economists polled by Reuters had forecast headline inflation would accelerate to 3.1%&nbsp;in annual terms.&nbsp;The South African Reserve Bank&nbsp;targets inflation of between 3% and 6%, aiming for the midpoint of that band.



&#8220;We expect inflation will continue to edge higher over the coming months. But it is likely to remain contained and stay below the 4.5% target midpoint,&#8221; Jason Tuvey, deputy chief emerging markets economist at Capital Economics,&nbsp;said.



The central bank last month cut its main lending rate by 25 basis points (bps) for the second meeting in a row, after inflation dropped below the target range in October for the first time in years.



Tuvey said a&nbsp;50-bps cut was not out of the question at the central bank&#8217;s next policy meeting&nbsp;in January.



Food and non-alcoholic beverages&nbsp;inflation&nbsp;slowed to 2.3%&nbsp;year on year&nbsp;in November from 3.6% one month earlier, the lowest rate&nbsp;of price increases for that&nbsp;category since December 2010, the statistics agency said.



But&nbsp;a month-on-month increase in fuel prices pushed the November headline inflation figure higher in annual terms.



Annual core inflation, which excludes food and fuel prices, also came in below expectations at 3.7% in November compared with 3.9% one month earlier.



(Reporting by Tannur Anders; Editing by Alexander Winning and Kate Mayberry)

SA INFLATION

South Africa inflation rises less than expected, helped by food

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108072174-1733432641152-gettyimages-2186442290-AFP_36ND9GA-820x461.jpeg" alt="" class="wp-image-564731" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108072174-1733432641152-gettyimages-2186442290-AFP_36ND9GA-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108072174-1733432641152-gettyimages-2186442290-AFP_36ND9GA-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108072174-1733432641152-gettyimages-2186442290-AFP_36ND9GA-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108072174-1733432641152-gettyimages-2186442290-AFP_36ND9GA-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108072174-1733432641152-gettyimages-2186442290-AFP_36ND9GA-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108072174-1733432641152-gettyimages-2186442290-AFP_36ND9GA.jpeg 1858w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A man shops at a Target store in Chicago on November 26, 2024. Kamil Krzaczynski | AFP | Getty Images</figcaption></figure>



A key economic report coming Wednesday is expected to show that progress has stalled in bringing down the inflation rate, though not so much that the Federal Reserve won’t lower interest rates next week.



The consumer price index, a broad measure of goods and services costs across the U.S. economy, is expected to show a 2.7% 12-month inflation rate for November, which would mark a 0.1 percentage point acceleration from the previous month, according to the Dow Jones consensus.



Excluding food and energy, so-called core inflation is forecast at 3.3%, or unchanged from October. Both measures are projected to show 0.3% monthly increases.



With the Fed targeting annual inflation at 2%, the report will provide more evidence that the high cost of living remains very much a fact of life for U.S. households.



“Looking at these measures, there’s nothing in there that says the inflation dragon has been slain,” said Dan North, senior economist at Allianz Trade Americas. “Inflation is still here, and it doesn’t show any convincing moves towards 2%.”



Along with the read Wednesday on consumer prices, the Bureau of Labor Statistics on Thursday will release its producer price index, a gauge of wholesale prices that is projected to show a 0.2% monthly gain.



<h2 class="wp-block-heading" id="h-halting-progress-but-more-cuts"><a></a>Halting progress, but more cuts</h2>



To be sure, inflation has moved down considerably from its CPI cycle peak around 9% in June 2022. However, the cumulative impact of price increases has been a burden to consumers, particularly those at the lower end of the wage scale. Core CPI has been drifting higher since July after showing a steady series of declines.



Still, traders in futures markets are placing huge odds that policymakers again will cut their benchmark short-term borrowing rate by a quarter of a percentage point when the Federal Open Market Committee concludes its meeting Dec. 18. Odds of a cut were near 88% on Tuesday morning, according to the CME Group’s FedWatch measure.



“When the market is locked in like where it is today, the Fed doesn’t want to make a big surprise,” North said. “So unless something has skyrocketed that we haven’t foreseen, I’m pretty sure the Fed is on a lock here.”



The CPI increase for November likely came from a few key areas, according to Goldman Sachs.



Car prices are expected to show a 2% monthly increase, while air fares are seen as 1% higher, the firm’s economists projected in a note. In addition, the nettlesome increase in auto insurance is likely to continue, rising 0.5% in November after posting a 14% increase over the past year, Goldman estimated.



<h2 class="wp-block-heading"><a></a>More trouble ahead</h2>



While the firm sees “further disinflation in the pipeline over the next year” from easing in the autos and housing rental categories, as well as softening in the labor markets, it also worries that President-elect Donald Trump’s planned tariffs could keep inflation elevated in 2025.



Goldman projects core CPI inflation will soften, but just to 2.7% next year, while the Fed’s target inflation gauge, the personal consumption expenditures price index, will move to 2.4% on the core reading from its most recent 2.8% level.



With inflation projected to run well above 2% and macro economic growth still running near 3%, this wouldn’t normally be an environment in which the Fed would be cutting. The Fed uses higher interest rates to curb demand, which theoretically would force businesses to lower prices.



Markets expect the Fed to skip the January meeting then possibly cut again in March. From there, market pricing is for only one or at most two cuts through the rest of 2025.



“Two percent to me doesn’t mean just touching 2% and bouncing along. It means hitting 2% for a continuous, foreseeable future, and none of that is evident in any of those reports,” North said. “You don’t really want to cut in that environment.”

108072174-1733432641152-gettyimages-2186442290-AFP_36ND9GA

The CPI report Wednesday is expected to show that progress on inflation has hit a wall

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="542" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/MWJNRTIKPBIWTA3IJGUOFSGGVQ-820x542.jpg" alt="" class="wp-image-564438" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/MWJNRTIKPBIWTA3IJGUOFSGGVQ-820x542.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/MWJNRTIKPBIWTA3IJGUOFSGGVQ-300x198.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/MWJNRTIKPBIWTA3IJGUOFSGGVQ-136x90.jpg 136w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/MWJNRTIKPBIWTA3IJGUOFSGGVQ-768x508.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/MWJNRTIKPBIWTA3IJGUOFSGGVQ-1536x1016.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/MWJNRTIKPBIWTA3IJGUOFSGGVQ-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Locals walk past barricades that were used by protesters after the ruling Frelimo party was declared the winner of this month&#8217;s disputed election, in Maputo, Mozambique, October 25, 2024. REUTERS/Siphiwe Sibeko/File Photo</figcaption></figure>



JOHANNESBURG, Dec 10 (Reuters) &#8211; South32 has withdrawn its output forecast for its Mozal Aluminium smelter in Mozambique amid post-election civil unrest, the Australian company said on Tuesday.



October&#8217;s disputed election results sparked protests from opposition supporters and there has been escalating violence since.



South32, which has a 63.7% stake in the Mozal Aluminium smelter, said the unrest had led to road blockages that have hampered the delivery of raw materials to the plant.



It had previously estimated output of 360 kilotonnes from the smelter this fiscal year. The project contributed about 28% of South32&#8217;s total aluminium output in fiscal 2024.



South African mining companies that ship minerals including chrome through the port of Maputo in Mozambique have also been hit by the unrest, which has on some days led to the closure of the main border between the neighbouring countries.



South African companies have grown increasingly reliant on routing cargo via the Maputo port as state-owned logistics group Transnet struggles to provide adequate freight rail and port services.



A spokesperson for miner Tharisa, which ships chrome via Maputo, told Reuters that the company had been affected by the latest border closure.



&#8220;It&#8217;s a significant amount of trucks that we have on the road,&#8221; said Ilja Graulich, adding that Tharisa may consider declaring a force majeure to its customers if the latest border closure is prolonged.



(Reporting by Felix Njini in Johannesburg and Sherin Sunny in Bengaluru. Editing by Savio D&#8217;Souza and Mark Potter)

featured

Power supply restored after major outage hits Kenya, affects internet access

Cocoa prices climb to new record high, prompting fresh warnings about extreme volatility

Ethiopia passes law allowing foreign banks to operate

China wants to dominate in AI — and some of its models are already beating their U.S. rivals

Rwandan president announces bid for F1 race

South Africa shifts to FDI outflows in third quarter, central bank says

Coffee prices climb to near 50-year highs — and it may take years for the rally to run out of steam

Zimbabwe at risk of another dry season after El Nino drought, says WFP

South African inflation expectations fall to midpoint of central bank range

Somalia, Ethiopia agree to work together to resolve Somaliland port dispute

Nigeria’s Dangote Refinery makes first petrol export to Cameroon

Annual U.S. inflation rate accelerates to 2.7% in November, as expected

UN chief says debt relief tools far from adequate

Ghana’s economy grew 7.2% in third quarter in recovery from crisis

South Africa inflation rises less than expected, helped by food

The CPI report Wednesday is expected to show that progress on inflation has hit a wall

Mozambique’s post-election protests hit South32 plant, chrome exports

News Tips

Advertise With Us

featured

Power supply restored after major outage hits Kenya, affects internet access

Cocoa prices climb to new record high, prompting fresh warnings about extreme volatility

Ethiopia passes law allowing foreign banks to operate

China wants to dominate in AI — and some of its models are already beating their U.S. rivals

Rwandan president announces bid for F1 race

South Africa shifts to FDI outflows in third quarter, central bank says

Coffee prices climb to near 50-year highs — and it may take years for the rally to run out of steam

Zimbabwe at risk of another dry season after El Nino drought, says WFP

South African inflation expectations fall to midpoint of central bank range

Somalia, Ethiopia agree to work together to resolve Somaliland port dispute

Nigeria’s Dangote Refinery makes first petrol export to Cameroon

Annual U.S. inflation rate accelerates to 2.7% in November, as expected

UN chief says debt relief tools far from adequate

Ghana’s economy grew 7.2% in third quarter in recovery from crisis

South Africa inflation rises less than expected, helped by food

The CPI report Wednesday is expected to show that progress on inflation has hit a wall

Mozambique’s post-election protests hit South32 plant, chrome exports

News Tips

Advertise With Us

Newsletters