Johannesburg - South Africa’s targeted consumer price inflation (CPI) quickened to 6.3% year-on-year (y/y) in January, from 6.1% in December, Statistics South Africa said on Wednesday.
On a month-on-month basis, inflation was at 0.6% from 0.2% in December. Economists surveyed by Reuters had expected CPI to inch up to 6.2% y/y and be at 0.5% month-on-month.
Gina Schoeman, senior economist at Absa Capital, said the figure wasn't that surprising.
“We think through 2012 we are going to continue to see food prices rising. Very importantly is that core inflation is now gaining momentum, it moved from 3.9 to 4.3%.
"That’s important because we’ve seen strong consumption over the last two years and it’s not unusual for that to start relating to higher underlying inflation in the economy, and I think today marks the start of that."
She said the South African Reserve Bank (Sarb) is likely to be "mindful of global growth risks" and if inflation continued to go up, it may raise interest rates in the fourth quarter.
Inflation breached the central bank’s 3-6% target in November and has been outside its target band since.
Sarb expects inflation to remain outside the target band throughout 2012, peaking at 6.6% in the second quarter, and move back to within the band in the first quarter of 2013.
Inflation was being driven mainly by cost-push pressures such as food, fuel and administered prices. Marcus said raising interest rates “at this stage would not be appropriate” given the lack of demand pressures.
The bank left the repo rate unchanged at 5.5% in January, after cutting rates by 650 basis points between end-2008 and end-2010 to 30-year lows. Its next meeting is in March.