Johannesburg - South Africa's headline consumer inflation
accelerated above expectations to 5.9% year-on-year in February, from 5.4% in
January, Statistics South Africa said on Wednesday.
Inflation was at 1.0% on a month-on-month basis in February
compared with 0.3% in January.
Economists had expected inflation to come in at 5.6%
year-on-year and 0.8% month-on-month in February.
Economist George Glynos said: "This begins to give the
Reserve Bank a bit of a headache in the sense that they have got an inflation
mandate which they need to look after. They will probably talk about core
inflation still remaining under control but the reality is that the weak rand
is starting to exert meaningful pressure.
"It will reinforce the likelihood that they will not be
decreasing rates any time soon."
Kadd Capital economist Elize Kruger said: "This means
there is no longer any option of a rate cut any more. The March figure is now
likely to come in higher than 6%, breaching the level sooner than
The rand was at R9.25 against the dollar at 08:08 GMT, from
R9.24 before the data was released at 08:00 GMT.
The yield on the 2026 bond fell to 7.47% from 7.48% while
that for the shorter-dated 2015 paper rose marginally to 5.475% from 5.47%.
Analyst Peter Worthington said: "It shows that the
central bank is in a tight spot and it supports the case that there's not going
to be any cut in rates. They're caught in a difficult bind between rising
inflation and an economy that's slowing."
Nedbank economist Busisiwe Radebe said: "It won't have
an impact on today's rates numbers. The governor said in Italy that there is no
room to cut any more rates and we can see it on the 5.9%. She also needs to
balance struggling growth with this higher inflation.
"Our view is that interest rates are going to remain at
this level for most of this year. We might see a reversal of policy late this
year or early next year."
Statistics South Africa has changed the weightings in its
consumer price index basket to give a greater weight to petrol and electricity
The Reserve Bank was able to cut interest rates for the
first time in 20 months in July partly because of softer-than-expected
It has left rates unchanged in the three meetings since, but
said the risks to the inflation outlook were on the upside with a weak rand
exchange rate and expected higher wages posing the main risk.
Governor Gill Marcus will announce the next move on rates
from 10:00 GMT.