The Consumer Price Index (CPI) in April remained unchanged at 5.9% year-on-year, Statistics South Africa (Stats SA) said on Wednesday.
“Headline CPI in April 2013 was 5.9%. This rate was the same as the corresponding annual rate of 5.9% in March 2013,” said Stats SA.
Analysts had expected CPI to come in at 5.7%.
In a research note earlier, Standard Bank economist Shireen Darmalingam said the bank estimated that CPI would rise to 5.8% year-on-year.
“CPI has been on an upward trajectory, mainly due to increases in fuel prices and pass-through from the weaker rand. However, core inflation (which excludes food, non-alcoholic beverages, petrol and energy) remains contained, with prices decelerating in March to 5.1% year-on-year from 5.3% year-on-year in February. Despite the decline in core and food inflation, we still see food as a risk to our CPI forecast,” she said.
Food prices rose by 0.5% on a monthly basis in April, while on an annual basis inflation was mainly driven by the housing utilities, miscellaneous goods and services and transport, among others.
The Reserve Bank targets inflation between 3% and 6%. A higher inflation leaves the Reserve Bank with less room to cut interest rates to boost economic activity.
“Despite just hovering below the Reserve Bank’s 6% upper target range, we do not foresee annual inflation breaching 6% in the May release, as the fuel price declined considerably in that month.
“We still expect inflation though to marginally breach 6% later in the year. The biggest upside risk still remains the rand, which has now reached a four-year low against the US dollar,” said Nedbank.
The data comes as the central bank is holding its Monetary Policy Committee (MPC) meeting on rates.
“The latest inflation numbers do not alter our interest rate view. We believe that rates will remain at current levels for the rest of this year. The MPC will need to strike a balance between high inflation and still poor economic growth outcomes, with the current policy stance likely to remain in place well into 2014,” noted Nedbank.
Governor Gill Marcus will tomorrow afternoon make public the MPC’s decision regarding rates.
At the second MPC meeting in March, the bank said it expected inflation to temporarily breach the upper end of the target range in the third quarter of 2013, when it is expected to average 6.3% and then moderate to 5.2% in the fourth quarter.
At the MPC’s second meeting of the year in March, the repo rate remained unchanged at 5%. – SAnews.gov.za