SA inflation accelerates to 5.9%

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Cape Town - South Africa’s inflation rate accelerated to 5.9 percent in February after the rand weakened and fuel costs rose.

Inflation accelerated from 5.8 percent in January, the Pretoria-based statistics office said.

The median estimate of 23 economists surveyed by Bloomberg was 5.9 percent.

Prices rose 1.1 percent in the month.

The rand plunged 22 percent against the dollar last year, and a further 5.7 percent in January, which boosted the cost of imports and prompted the Reserve Bank to raise its benchmark repurchase rate by half a percentage point to 5.5 percent on January 29.

The rand gained 3.8 percent against the dollar since the start of February.

“The petrol price is a big factor driving inflation,” Isaac Matshego, an economist at Nedbank, said by phone from Johannesburg yesterday.

“The rand is also playing a role. There is a chance of another rate increase next week, although the rand’s recent pullback has reduced the likelihood of that happening.”

The central bank in January forecast inflation will breach the top of its 3 percent to 6 percent target in the second quarter and peak at 6.6 percent in the final three months of the year.

The bank’s Monetary Policy Committee will announce its next interest rate decision on March 27.

Reserve Bank Governor Gill Marcus said on March 13 the committee won’t necessarily adjust the interest rate every time it meets and that if rates do rise, the increases may not be the same magnitude.

The core inflation rate, which excludes food, non-alcoholic beverages, gasoline and energy costs, was 5.3 percent in February, in line median estimate of 10 economists surveyed by Bloomberg. - Bloomberg news

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