Johannesburg - South African inflation slowed for a second consecutive month in April, leaving room for the Reserve Bank to pause its policy tightening cycle.
The inflation rate declined to 6.2 percent from 6.3 percent a month earlier, Pretoria-based Statistics South Africa said on its website on Wednesday. The median of 25 economist estimates compiled by Bloomberg was 6.2 percent. Prices rose 0.8 percent in the month.
The worst drought in more than a century has driven up food costs and added to pressure on consumer prices caused by the rand’s 27-percent fall against the dollar since the start of last year.
South Africa’s central bank Monetary Policy Committee has increased its benchmark interest rate four times since July to 7 percent, even as it cut its forecast for economic expansion this year, to try steer inflation back into its 3 percent to 6 percent target band.
“Softer CPI prints in recent months and a still very weak underlying growth outlook should support the MPC leaning towards leaving rates unchanged,” Jeffrey Schultz, an economist at BNP Paribas Securities, said in an e-mailed note to clients before the data was released.
The central bank will announce its next interest rate decision on Thursday and has said inflation will only return to the target band in the fourth quarter of next year. Nineteen of 25 economists in a survey compiled by Bloomberg forecast the MPC will leave borrowing costs unchanged.
Core inflation, which excludes food, non-alcoholic beverages, gasoline and electricity costs, quickened to 5.5 percent in April, from 5.4 percent the month before.
* With assistance from Simbarashe Gumbo
BLOOMBERG