Consumer inflation edges up
Reuters & Sapa
Johannesburg - South Africa's consumer inflation edged up
slightly to 4.2% year-on-year (y/y) in April, from 4.1% in March, Statistics
South Africa said on Tuesday.
The consumer price index (CPI) is among the data considered
by the Reserve Bank when its Monetary Policy Committee decides on interest
Stats SA said headline CPI slowed to 0.3% month-on-month
from 1.2% in March.
Economists surveyed by Reuters expected headline y/y
inflation to accelerate to 4.4%, while slowing to 0.5% on a monthly basis.
The figure is in line with the Reserve Bank's target of
keeping annual CPI between 3% and 6%. The increase in April is also in line
with the Reserve Bank's view that inflation would continue to rise steadily
this year, and breach the upper end of the inflation target in the first
quarter of 2012.
Analysts welcomed the marginal increase.
ETM managing director George Glynos said it was a
"pretty decent number".
"I think it will set the trend for what we'll see in
the second half of this year where inflation surprises forecasters to the
downside and why we believe rate hikes, if there are any, will be pushed out to
well into 2012," he said.
"Without fuel prices this number would have been quite
a bit lower so it is really cost-push factors that are at play. The rest of the
basket remains muted.”
Peter Attard Montalto, emerging market economist at Nomura,
said the figure was below his forecast.
"We will have to look at the core print which may not
have based as expected, and there is likely a little more pass-through in
headline from recent stronger rand. This should perhaps temper some of the
market hawkishness after Sarb (the SA Reserve Bank) last week. Remember, we are still looking for
(a) November hike."
Inflation has slowly edged up since hitting a ivef-year low of
3.2% in September last year. Rising food and fuel prices drove it to 4.1% in
The Reserve Bank last week raised its inflation forecast and
said inflation was likely to pierce its 3% to 6% target band briefly, peaking
at 6.3% in the first quarter of 2012.
The central bank said it would not hesitate to act on signs
that inflation was consistently above the target band. It has left its repo
rate unchanged at 5.5% this year, after reducing it by 650 basis points between
December 2008 and December 2010.
T C Makgoba
Fistly, we have to acknowledge that the inflationary pressure is on us and there has to be some reaction, but the reaction of the SARB has to be cautious given the slow recovery as shown by retail figures. The European problems are also putting some weight on us. For the meanwhile, the Rand seems determined to curb us from more inflationary pressures, whether these is good or bad, remains to be seen!