• Power to Gordhan

    SONA 2016 has set it all up for Pravin Gordhan, it shows just how powerful he may be, says Daniel Silke.

  • Inside Labour

    The history of Valentine Day cards gives a glimpse of how technology resulted in job cuts, says Terry Bell.

  • Courage to do right

    A number of factors will impede Zuma’s opportunity to have a ‘Lula moment’, says Prof Dirk Kotze.

All data is delayed
Loading...
See More

Petrol pushes inflation over 6% target

Aug 21 2013 12:22
Reuters
Johannesburg - South Africa's headline consumer inflation breached the ceiling of the central bank's target band in July, overshooting market expectations as higher fuel prices weighed on consumer prices.

Headline inflation in July hit 6.3% year-on-year, accelerating from 5.5% in June, data from Statistics South Africa showed on Wednesday.

The data helped push the rand to more than 1% weaker versus the dollar.

On a month-on-month basis, July CPI stood at 1.1% compared with 0.3% in June, Statistics South Africa said.

The market had expected inflation to quicken past the central bank's 3% to 6% target range, but at a slightly lower rate of 6.2% year-on-year, and for month-on-month CPI to quicken to 0.9%.

"This jump was to a large extent driven by the sharp increase in petrol prices in July, but there was also broader-based pressure. The data does not change our view that interest rates will remain steady until 2015," said Elna Moolman, an economist, Macquarie First South Securities.

A weak local currency resulted in petrol prices rising to R13.23 a litre in July from R11.86 at the start of the year.

The rand has fallen 21% against the dollar since the start of the year and dealers expect that a sell-off of emerging market assets could push the local currency back to a four-year low of R10.36/$, last tested on June 11.

Economists have said the central bank is unlikely to move on interest rates at its next rate-setting meeting in September, however the risk of a rate hike is heightened by the inflationary pressure.

"It seems that the underlying bias is skewed towards a hike given that the persistent message from the MPC (Monetary Policy Committee) has been the prevalence of upside inflation risks," said Anisha Arora, an emerging market analyst at 4Cast.

The central bank forecast at its July meeting that inflation would breach its 3% to 6% target at the 6.3% level before returning within the target by year-end.

Follow Fin24 on Twitter, Facebook, Google+ and Pinterest.

inflation  |  petrol  |  economy

 
 
 

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
25 comments
Comments have been closed for this article.
 

Company Snapshot

We're talking about:

SMALL BUSINESS

Marketing is a big concern in SA's small business community, followed by a lack of confidence and partnering with the wrong people, according to a survey.
 

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

Will Jacob Zuma's State of the Nation speech help SA avoid "junk" downgrade?

Previous results · Suggest a vote

Loading...