Johannesburg - The increase in South Africa's consumer price index (CPI), which is used by the South African Reserve Bank for its inflation target, was up 6.1% year-on-year (y/y) in September from 6.4% in August, Statistics SA said on Wednesday.
CPI was up 0.4% month-on-month (m/m) after increasing 0.3% in August.
CPI was expected to have receded slightly to 6.3% y/y in September from the 6.4% increase in August, according to a survey of 13 leading economists by I-Net Bridge.
Forecasts among the economists ranged from 5.9% to 6.4%.
Mike Schüssler, director at Economists.co.za, said, "It is certainly better than I had expected. It's good news amid the bad news, but it doesn't change the interest rates outlook, especially given Eskom's plans.
"It is also good news for bond markets, but I think this is as low as we are going to go before we start picking up again next year."
Quantum Asset Management economist Doret Els said, "It came in below forecast. The big driver was the lower rise in food prices, especially bread and cereals which showed a year-on-year decline of 2%. Meat prices are also rising slower.
"It's basically the slower rise in service and food prices that are the main drivers to the downside."
Elize Kruger, economist at KADD Capital, said, "Thanks to a further moderation in food price inflation, total CPI came
out somewhat better than expected. On an annual basis, food price inflation moderated to 4.9% from 6.1% previously, somewhat better than my expectation.
"Inflation is now very close to the 6% level and could potentially dip below 6% in both October and November, though it will be short lived as a very low base will lift the CPI again in December.
"Although positive on the day, the medium-term concerns about inflation, with specific reference to huge electricity tariffs and its possible secondary effect on inflation, will prevent the Reserve Bank from cutting interest rates further."
"The lower-than-expected outcome was due to the ongoing moderation in processed food price inflation, with a few other categories also showing lower contributions," Investec economist Annabel Bishop.
"We have long held the view that the recession will result in lower inflation and continue to believe that CPI will fall below 6.0% in the fourth quarter of this year, due to recessionary pricing.
The better than generally expected figure may make the inflation forecast more benign, but we still don't believe it will ease monetary policy further at the next meeting, although the window for a December 50bp rate cut is opening wider," she added.
- I-Net Bridge