Johannesburg - Consumer price inflation was dropped to 6.1
percent in March, down from 6.3 percent in February.
This is according to official statistics from Stats SA
provided on Wednesday.
The agency says the consumer price index increased by 0.6
percent month-on-month in March 2017.
Analysts have been concerned that recent political moves,
which saw President Jacob Zuma fire former finance minister Pravin Gordhan ina
Cabinet shuffle and replace him with Malusi Gigaba, would hurt the rand,
leading to higher inflation and potential interest rate hikes.
The South African Reserve Bank has kept the prime lending
rate stable at 10.25 percent over the past few meetings, even though inflation
has stubbornly remains outside the 3-6 percent target range.
Paul Sirani, chief
market analyst at Xtrade, notes the fall in inflation is likely to spur the
rand to a strong session.
The currency lost
10 percent against the dollar after Gordhan was recalled on March 27, shortly
before being axed. It has, however, recovered off those lows.
“Having dipped down to a worrying 18-month low amidst
political uncertainty last week, the rand has come back fighting and this
morning’s reported fall in inflation is likely to spur on another strong
session,” says Sirani.
Read also: How South Africans are dealing with inflation
However, Sirani
says the Reserve Bank is unlikely to move on until inflation comes down
further and, importantly, remains down.
“Today’s figure shows that prices are heading in the
right direction, though policy makers are likely to sit on their hands and seek
further reassurance from next month’s figures.
Inflation was 6.6 percent in January, down from 6.8
percent in December.’
“A poor stretch for the rand during the early part of
March, fuelled by the [removal] of Gordhan, will have heightened import costs
and that’s likely to feed into next month’s CPI reading,” Sirani notes.
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