THE surprisingly low inflation numbers for last month provide the Reserve Bank with a bit more room to at least consider making a change to rates, after surprising all of us at the last meeting. It all depends on the Bank’s reading of economic developments in Europe and the US over the coming weeks.

The emerging market story is going off the boil, as evidenced by weaker company profits from growth engines such as China.

At the Bank’s last policy meeting, governor Gill Marcus and her team sprang a surprise on everyone by cutting rates by 50 basis points to boost the slowing economy.

Inflation last month came in at 4.9% compared to 5.5% in June, and lower than the consensus forecast of 5.2 %. The Reserve Bank has a targeted inflation rate of between 3% and 6%.

A slowdown in spending and a weak global economy are likely to keep inflation contained till the end of the year. But food remains something to keep an eye out for because of the severe drought in the US, that’s damaged its maize harvest. The world’s biggest economy is also the biggest producer of the grain.

There are certain to be some calls for the central bank to cut rates even lower by the end of the year. After September’s monetary policy meeting, the Bank will have one more chance to make a change in November.

Odds are more stacked towards a cut in about six months.

In deciding on the next move, the Bank will have to consider the effect of rising fuel and food costs, which are on the rise again after easing in the global slowdown.

South Africa’s petrol price may rise by up to 78c next month because of higher international prices. Local grain prices have been rising in light of the worst drought in the US since the 1950s, which has not yet been fully reflected in inflation.

There’s also the rand to consider, which remains in very vulnerable territory in this "risk on, risk off" environment.

Foreigners’ impressions of how the Marikana tragedy is handled will also play a part.

All this may not take inflation outside the Bank’s targeted range but should take the figure back into the 5% region.

The Reserve Bank "is going to sit tight for a while … it’s too soon to make another move," Ian Cruickshanks, Nedbank Capital head of strategic research, says.

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AS WE enter into spring and our spirits begin to lift after a winter where Johannesburg had its first bout of full blown snow in almost 30 years, the northerners go back to work from their holidays and the Olympic party, only to find nothing has fundamentally changed.

The European economy is still struggling to find any traction because of austerity. Across the Atlantic, the row between the Republicans and the Democrats only gets uglier as the election approaches, showing just how polarised the US has become.

August is the traditional holiday period for Europe. In the US, August is the driving season, a contributing factor to oil’s rise over the past couple of weeks. So September is like our January, back to the hard grind and for some who’ve overspent, back to empty wallets.

In such a glum mood, it’s worrying that the month of September comes with quite a few important and potentially defining eurozone summits. In this, their last full week of summer, the archetype of European woes, Greece, comes into full focus.

A rude awakening indeed.

Greece’s Prime Minister Antonis Samaras meets over the next two days with the leaders of Germany and France. The country’s continued membership of the common monetary union boils down to the patience of the two biggest economies in the region.

Already, Samaras has asked for a bit more. Over the next two days, markets will try to get a reading of just how much German Chancellor Angela Merkel has left.

Later in the month, the troika of the European Central Bank, International Monetary Fund and the European Commission gives feedback on Greek efforts at meeting the obligations of its bail-out.

Most anticipated is the German Constitutional Court decision on the planned rescue fund, the European Stability Mechanism.

As the Rand Merchant Bank warned on Wednesday, the month of September is set to be an extremely busy and "very" volatile month for our markets.

Last September, the JSE all share fell 4.3% and gold reached a record high as investors’ dumped equities in search of safe havens. In September 2008, Lehman collapsed and South African stocks plunged close to 14%.