Johannesburg - South Africa’s targeted consumer inflation was steady at 6.1% year-on-year (y/y) in December, data showed on Wednesday.
Statistics South Africa said the headline consumer price index slowed to 0.2% month-on-month from 0.3% in November, while the 2011 annual average accelerated to 5.0% compared to 4.3% in 2010.
Economists surveyed by Reuters expected headline y/y inflation to quicken to 6.2% and remain unchanged at 0.3% on a monthly basis.
Stanlib chief economist Kevin Lings said it was a good figure.
“A fairly good reading. Obviously inflation is going to remain above 6% for a couple of months, but then we should start to see the benefit of some of the base effects in food prices and in some of the energy prices. In the end, inflation is reasonably well contained and the Reserve Bank can just sit on their hands and do nothing.”
Dennis Dykes, chief economist at Nedbank, said it was close to what was expected by the Reserve Bank.
"They’ll pretty much keep rates on hold. It’s a very uncertain economic outlook and I don’t think they’re going to be drawn into all the false-dawn optimism.”
Carmen Nel, senior economist at Rand Merchant Bank, said: “It’s not a large positive surprise but certainly a welcome positive surprise, given that expectations had discounted notable upside risks on the number.
"This does seem to suggest that underlying inflation based on the core measures remains muted, which means the Sarb (SA Reserve Bank) might sound a bit less hawkish than expected in tomorrow’s MPC (monetary policy committee) statement.”
The rand eased a fraction to R8.023/$ from R8.0029/$ before the data was released.The yield on the 2015 bond fell to 6.69% from 6.74% prior.
Inflation breached the central bank’s 3% to 6% target in November, coming in at a 20-month high of 6.1%.The bank expects inflation to peak at 6.3% in the first quarter of 2012 and move back to within the target band in the fourth quarter of the year.
The main driver of inflation has been higher food and transport costs. The central bank has previously said it would not increase rates only on cost-push pressures.
The bank left the repo rate unchanged at 5.5% last year, after cutting rates by 650 basis points between end-2008 and end-2010 to 30-year lows. It will announce its next rates decision on Thursday.