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Petrol fuels inflation shocker

Oct 24 2012 10:53 Reuters
Petrol

(Shutterstock)

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Johannesburg - South Africa’s headline consumer inflation accelerated to 5.5% year-on-year in September from 5% in August, Statistics South Africa said on Wednesday.

Inflation also quickened on a month-on-month basis, to 0.9% from 0.2%t in August and against market expectations for a 0.6% print.

Economists had expected prices to rise by 5.2% year-on-year.

Nedbank economist Busisiwe Radebe said the majority of the increase came from housing, utilities and transport with mainly the petrol price that increased by about 8.6% month-on-month.

“We think inflation remains at more-or-less the 5% to 5.5% mark for the remainder of the year. The Monetary Policy Committee will take a wait-and-see approach.

“If this global monetary stimulus we see sparks some recovery later in the year, we expect rates to remain stable. But if something huge had to happen and the global economy had to step into a recession, then we can expect further easing.

“But our baseline view is that rates will remain stable with some reversal and policy easing possible in late 2013 or even 2014.”

The rand weakened to R8.7895/$ at 10:23 from 8.7550 before the data was released at 10:00.

The latest inflation figures follow the Reserve Bank's move to cut interest rates for the first time in 20 months in July partly because of softer-than-expected inflation prints, and said in September the risks to the inflation outlook were more or less balanced.   

Higher food and oil prices pose the main upside risk to the inflation outlook.

The bank also said wage settlements in the strike-ridden mining sector risked setting a precedent for wage demands generally in the economy.

The Reuters Econometer poll saw 2012 inflation forecasts trimmed slightly for this year.

inflation  |  petrol
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