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Johannesburg - The increase in South Africa's consumer price index (CPI), which is used by the South African Reserve Bank (Sarb) for its inflation target, was 3.7% year-on-year (y/y) in January from 3.5% y/y in December, Statistics South Africa (Stats SA) said on Wednesday.
The Sarb's inflation target band is 3% to 6%.
CPI was expected at 3.7% y/y, according to a survey of leading economists by I-Net Bridge, with forecasts among the 12 economists ranging from 3.5% to 3.8%.
Brait economist Colen Garrow said cost pressures indicate that inflation would go higher.
"I think the trend is what we’ve got to look at. I think there is enough cost pressure in the pipeline to indicate it is going higher," he said.
"The big issue is whether it's going to challenge the upper end of the target range by the end of the year. My feeling is that it may, and it is also likely to encourage the Reserve Bank to put rates up before the end of the year. So I think that is where we going. The trend is up."
Stats SA said that the food and non-alcoholic beverages index increased by 2.2% between December 2010 and January 2011, while the annual rate increased to 3.1% in January from 1.5% in December.
The following components in the food and non-alcoholic beverages index increased: fruit (7.1%), oils and fats (4.9%), meat (4.0%), sugar, sweets and desserts (1.9%), vegetables (1.7%), other food (1.6%), cold beverages (1.5%), hot beverages (1.4%), fish (1.1%), bread and cereals (0.5%) and milk, eggs and cheese (0.5%).
The transport index increased by 0.5% between December and January, mainly due to a 29 cents per litre hike in the petrol price. The annual rate increased to 2.5% in January from 1.6% in December.
CPI registered 4.3% in 2010 from the 7.1% in 2009. Annual CPI in 2008 struck 11.5% from 7.1% in 2007.
Interest rates were cut to their the lowest in almost 30 years to 5.5% in November last year, and resulted in a real interest rate of about 1%.
The Sarb's inflation target band is 3% to 6%.
CPI was expected at 3.7% y/y, according to a survey of leading economists by I-Net Bridge, with forecasts among the 12 economists ranging from 3.5% to 3.8%.
Brait economist Colen Garrow said cost pressures indicate that inflation would go higher.
"I think the trend is what we’ve got to look at. I think there is enough cost pressure in the pipeline to indicate it is going higher," he said.
"The big issue is whether it's going to challenge the upper end of the target range by the end of the year. My feeling is that it may, and it is also likely to encourage the Reserve Bank to put rates up before the end of the year. So I think that is where we going. The trend is up."
Stats SA said that the food and non-alcoholic beverages index increased by 2.2% between December 2010 and January 2011, while the annual rate increased to 3.1% in January from 1.5% in December.
The following components in the food and non-alcoholic beverages index increased: fruit (7.1%), oils and fats (4.9%), meat (4.0%), sugar, sweets and desserts (1.9%), vegetables (1.7%), other food (1.6%), cold beverages (1.5%), hot beverages (1.4%), fish (1.1%), bread and cereals (0.5%) and milk, eggs and cheese (0.5%).
The transport index increased by 0.5% between December and January, mainly due to a 29 cents per litre hike in the petrol price. The annual rate increased to 2.5% in January from 1.6% in December.
CPI registered 4.3% in 2010 from the 7.1% in 2009. Annual CPI in 2008 struck 11.5% from 7.1% in 2007.
Interest rates were cut to their the lowest in almost 30 years to 5.5% in November last year, and resulted in a real interest rate of about 1%.
