The Consumer Price Index in September rose to 5.7%, Statistics South Africa (Stats SA) said.
“This rate was 0.4 of a percentage point higher than the corresponding annual rate of 5.3% in August 2011. On average, prices increased by 0.4% between August 2011 and September 2011,” said Stats SA on Wednesday.
According to Stats SA, the food and non-alcoholic beverages index increased by 1%, while the housing and utilities index increased by 0.6% between August and September 2011 mainly due to an increase in actual rentals for housing and a 0.7% increase in owners’ equivalent rent.
Market expectation was that CPI would rise to 5.6%.
Nedbank economist Carmen Altenkirch said inflation was expected to continue its upward trend in the coming months, adding that a lot depended on the direction of the global economy and how it will impact domestic growth and the rand.
“Global growth is expected to slow and commodity prices are likely to moderate slightly. Subdued domestic demand will limit retailers pricing power and should help to contain inflation.
“However, these inhibiting forces on inflation will continue to be mitigated by higher labour costs and rising administered prices. As a result, inflation during 2012 is expected to remain relatively sticky around the higher end of the target range.”
Earlier on Wednesday, Standard Bank economists said they expected CPI to have picked up to 5.8%, with the food and non-alcoholic beverages category likely put pressure on inflation in September.
“With petrol prices set to continue rising and food inflation likely to climb further, the CPI could exceed the upper band of the target range by year-end,” said Standard Bank in a note.
Nedbank said inflation’s steady rise towards the 6% range will not cause the Reserve Bank undue concern in the short term.
“Rather, the bank will continue to focus on how Europe’s debt crisis unfolds and what implications this may have for both inflation and growth. The Bank is likely to maintain its cautious wait-and-see approach until the global and local economic environment becomes clearer.
“We maintain our view of unchanged interest rates until the third quarter of 2012, but acknowledge that the possibility of a rate cut in the short term has increased.”
The central bank will hold its last Monetary Policy Committee meeting for the year from 8 – 10 November. In September, the MPC left rates unchanged at 5.5%. – BuaNews
