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Johannesburg - South Africa's targeted consumer inflation breached the central bank's 3% to 6% target in November as expected, complicating the Reserve Bank's strategy to keep it in check by raising rates when growth is expected to be weak.
November consumer inflation quickened to 6.1% year-on-year (y/y) from 6.0% in October, a level last seen in January 2010, Statistics South Africa said on Wednesday.
Economists surveyed by Reuters had expected headline year-on-year inflation to accelerate to 6.2% and slow to 0.3 on a monthly basis.
Stats SA said headline consumer price index slowed as expected to 0.3% on a month on month basis, from 0.5% in October.
A weak rand was is driving prices higher and could push prices above the central bank's projected peak of 6.3%.
"If the rand weakens then forecasts will rise across the board," said Carmen Altenkirch, an economist at Nedbank, adding the Reserve Bank will not necessarily raise rates in response.
"The Reserve Bank will continue having to juggle very weak growth against rising inflation and as long as inflation is driven by external factors and there's limited evidence of second-round effects, they will probably keep interest rates low for longer.
"We've revised our interest rate rise to November from July."
The central bank said last month the rising costs of imports would likely drive inflation to peak at 6.3% in the first quarter of 2012; however, it was watching and not reacting to inflation for the moment.
The rand has lost about 25% against the dollar since the start of the year, mostly on risk aversion related to the European debt crisis.
The currency was slightly firmer against the dollar at 8.3162 by 08:40 GMT on Wednesday, but was within a recent range and analysts say as long as the debt crisis festers, risk aversion is likely to drive investors to traditionally safe assets like the dollar.
Dealers say they had already priced in the acceleration in consumer prices.
"From an interest rate differential point of view, the data
is positive for the rand as it may diminish hopes for further
interest rate cut," Standard
Bank economist Tebogo Mosepele said in a note to investors after the data release.
"However, the rand is likely to maintain its weaker bias as rand participants remain preoccupied with the continuing debt crisis in Europe and fears of a global economic slowdown."
