Johannesburg - Inflation looks set to remain within the Reserve Bank's target range of 3% to 6% for 2011, Investec [JSE:INL] economist Annabel Bishop said on Wednesday.
She said inflation was expected to average close to the midpoint of the target and move toward 5% in 2012.
The annual Consumer Price Index (CPI) struck 7.1% in 2009. The 2010 average is likely to be released in the first quarter of this year.
With inflation remaining firmly within the target band, Bishop hinted at more stability in interest rates.
"This should mean interest rates remain unchanged in 2011, with one more cut of 50 basis points at best," she said.
Inflation is believed to have bottomed in September, when it reached a year-on-year (y/y) level of 3.2%. In November it was 3.6% y/y.
Bishop said food prices and administered prices could prove to be risks to the benign inflation outlook.
Bad weather could affect food crops, causing prices to rise.
Administered prices include hefty electricity tariff increases of about 25.8% this year.