Consumer inflation near to 5-year high

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Johannesburg - South Africa’s inflation rate climbed to 6.6 percent in May, the highest in almost five years and exceeding the central bank’s target for a second month.

Inflation accelerated from 6.1 percent in April, Pretoria-based Statistics South Africa said on its website today.

The median estimate of 25 economists surveyed by Bloomberg was 6.5 percent.

Prices rose 0.2 percent in the month.

The Reserve Bank kept its benchmark repurchase rate unchanged at 5.5 percent last month even as it forecast inflation would stay outside the 3 percent to 6 percent target band until the second quarter of next year.

Africa’s second-biggest economy is threatened with recession after a 20-week platinum strike caused gross domestic product to contract an annualised 0.6 percent in the first three months of the year.

The inflation data “will most certainly continue to highlight the Reserve Bank’s current dilemma of managing an uncomfortable domestic inflation environment amid a weakening economic backdrop,” Jeffrey Schultz, an economist at BNP Paribas Cadiz Securities in Johannesburg, said in an e-mailed note to clients before the release of the data.

The core inflation rate, which excludes food, non-alcoholic beverages, gasoline and electricity costs, was unchanged at 5.5 percent in May. - Bloomberg News


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