The Consumer Price Index (CPI) rate rose to 5.9% in February, Statistics South Africa (Stats SA) said today.
In January CPI – which the South African Reserve Bank (SARB) uses to target inflation – rose to 5.8%.
The Reserve Bank targets inflation between 3% and 6%.
Wednesday’s data was in line with market expectations.
On average, prices increased by 1.1% between January 2014 and February 2014, Stats SA said.
On a monthly basis, prices rose by 1.1%, mainly pushed up by the transport category, which contributed 0.2 percentage points to the monthly increase, food and non-alcoholic beverages.
Nedbank economists said the inflation outlook remains poor with CPI expected to breach the upper end of the Reserve Bank’s target range in next month’s figure. CPI is expected to remain above the range into the first half of 2015 due to a weaker rand and higher food prices.
“The inflation outlook remains poor in the short term, as the rand is still vulnerable despite its recent strengthening. However, we believe that the weaker growth picture may convince the MPC [Reserve Bank’s Monetary Policy Committee] to keep rates on hold next week, but there is a possibility of another 50 basis points hike towards mid-year as inflation rises above the 6% upper target,” said Nedbank.
In January, the bank raised the repo rate by 50 basis points to 5.5%. The bank will make an announcement on rates tomorrow afternoon. – SAnews.gov.za
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