The Consumer Price Index (CPI) in October rose to 5.6% year-on-year, Statistics South Africa said.
“This rate was 0.1 of a percentage point higher than the corresponding annual rate of 5.5% in September 2012,” said Stats SA. Market expectation was that CPI would come in at 5.4%.
The October number had edged up closer to the upper limit of the 3 to 6% target set by the Reserve Bank.
According to Stats SA the main contributors to the increase were housing and utilities, transport, food and non-alcoholic beverages.
Economists expect inflation to remain within the inflation target range for the rest of the year with food prices however posing a danger following a dry summer in the US while the weaker exchange rate poses a risk early in 2013.
“We think that the MPC will keep rates unchanged tomorrow. In 2013 much will depend on whether the US fiscal cliff can be averted and on developments in Europe. Clearly a renewed slump globally would increase the possibility of further interest rate cuts domestically. However, with rising inflationary pressures and a vulnerable balance of payments, the MPC will probably keep rates on hold provided there is no threat of recession,” said Nedbank economists.
Governor Gill Marcus is expected to announce the Monetary Policy Committee’s decision on interest rates (following its last meeting for the year) on Thursday afternoon.
“We think that while the SARB would still like to cut rates, growth concerns are likely to be the primary motivator for further monetary easing. To our minds, the risks are for easing to take longer rather than not at all,” said Standard Bank.
At its September meeting, the MPC kept the repo rate unchanged at 5%. – SAnews.gov.za
