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Dip in inflation seen, meat prices worry

Nov 19 2012 08:33
Johannesburg - Inflation is set to moderate slightly in October although the rising cost of meat could push food prices higher, a Reuters poll found on Friday.

The survey of 19 economists suggested inflation retreated to 5.4% in October from 5.5%. The consumer price index is expected to have risen 0.4%, less than the 0.9% rise seen in September.

"Monthly food price (rises) will be lower this year than last, equally we see core inflation remaining under control," said Peter Attard Montalto, economist at Nomura International, referring to the inflation rate stripped of volatile food and fuel prices.

In September, headline inflation at 5.5% came in higher than the 5.2% forecast, mainly due to higher food and fuel prices.

"We expect CPI for October 2012 to retreat slightly from September," said Elna Moolman, economist at Renaissance Capital. "But we note the forecast risk around this number is reasonably high, mainly because of notoriously volatile food prices."

The Deaprtment of Energy said the retail petrol price would rise by about 8.4% a litre in September - partly to finance wage increases for petrol station employees - and then by nearly 2% in October due to the weaker rand.

The rand has lost more than 10% against the dollar on the back of mining labour unrest and wildcat strikes that spread to other sectors.

According to the latest Reuters Econometer, inflation is expected to average this year at 5.59%.

All 22 economists polled by Reuters on Friday said the Reserve Bank's Monetary Policy Committee (MPC) would leave rates unchanged at 40-year lows at the meeting ending next Thursday.

Statistics South Africa is due to release consumer inflation on Wednesday.


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