Annual consumer inflation was unchanged at 3.2% in February at 3.2%, with increases registered in housing and utilities, food and alcoholic beverages and restaurants and accommodation offset by decreases in the services sector, Statistics South Africa said on Wednesday.
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Annual consumer inflation was unchanged at 3.2% in February at 3.2%, with increases registered in housing and utilities, food and alcoholic beverages and restaurants and accommodation offset by decreases in the services sector, Statistics South Africa said on Wednesday.
On a monthly basis, inflation accelerated to 0.9% in February compared with 0.3% in January.
Housing and utilities inflation came in at 4.4%, while that for food and alcoholic beverages was at 2.8% and restaurants and accommodation services at 4.6%, according to Statistics South Africa.
Durable goods inflation remained 0.8% on an annual basis and that for semi-durable goods inflation came in at 1.2%.
Core inflation (which excludes food, non-alcoholic beverages, fuel and energy prices), eased to 3.4% year-on-year in February, from 3.5% in January.
Wednesday’s print comes a day before the South African Reserve Bank’s monetary policy committee (MPC) announces its interest rate decision, with economists widely expecting it to keep the benchmark repurchase rate unchanged at 7.5% after a 25 basis point cut in January.
The economists say that although inflation still remains below the 4.5% midpoint of the Reserve Bank’s 3-6% target band, rising price pressures as well as global uncertainty will restrain the MPC from loosening policy any further.
“Compounding inflationary risks, the government’s recent announcement of a 0.5 percentage point VAT increase could add further upward pressure on prices, which may weigh on consumer spending and household budgets,” Casey Sprake, an economist at Anchor Capital, said in a statement.
“While inflation remains near the lower bound of the Reserve Bank’s target range, keeping the case for a potential rate cut intact, global uncertainties continue to complicate the outlook.”
Anchor Capital expects inflation to stabilise at 4.7%, slightly above the 4.5% midpoint, over the next five years.
Economists at Investec predicted the Reserve Bank would leave interest rates unchanged on Thursday, citing concerns “over the high degree of uncertainty around the global outlook and still sees risks to domestic inflation to the upside.”
Nedbank also expects interest rates to remain unchanged.
