South African September Credit Growth Slows to 22.5%

South African credit growth slowed to an annual 22.5 percent in September as higher interest rates and stricter borrowing laws slashed spending on cars and furniture.

Borrowing growth by households and companies slowed from a revised 23.2 percent in August, the Pretoria-based central bank said. Credit was expected to expand 21.6 percent, according to the median estimate of 13 economists surveyed by Bloomberg.

The Reserve Bank increased its benchmark interest rate three times this year to 10.5 percent, concerned that strong consumer spending will stoke inflation. Credit growth in excess of 20 percent for almost two years, and inflation above the 3 percent to 6 percent target range for six months, have added to pressure on the central bank to raise interest rates further.

``There's a moderation in the credit numbers, but not a collapse,'' said Monale Ratsoma, an economist at Absa Group Ltd., South Africa's third-largest bank. ``Inflation dynamics are not looking good. The risks for interest rate hikes have increased significantly.''

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