Johannesburg - South Africa’s consumer inflation accelerated
more than expected to 4.6% year-on-year (y/y) in May from 4.2% in April,
Statistics South Africa said on Wednesday.
On a month-on-month (m/m) basis, the consumer price index (CPI)
also quickened to 0.5% m/m from 0.3% in April, Stats SA said.
Economists surveyed by Reuters expected headline y/y inflation to tick up slightly to 4.3% in May, while remaining steady at 0.3%.
The CPI is used by the SA Reserve Bank (Sarb) for its
inflation target. The Sarb's band is 3% to 6%.
Analysts said the figure was unexpected.
"It is certainly a surprise. We were anticipating only
4.3%. The increase probably reflects the impact of previous increases in
international food and fuel prices, which we anticipate will continue to flow
through," said Carmen Altenkirch, senior economist at Nedbank.
Colen Garrow, economist at Brait, said CPI at 4.6% was high
and might herald a rate hike later this year.
"I think it is just confirming what we know and
probably expect - you know (in the) fourth quarter we are heading towards a
rate hike probably,” he said.
“The trend is higher - how much higher: probably it will
exceed the upper end of the target by Q4 and I think en route we’re probably
going to get a hike in interest rates.”
ETM economist Kamilla Golda said higher food prices contributed to the unexpected rise.
“I think food was the big surprising factor in this month’s data but I still think today’s number does not preclude the possibility of a slower inflation trajectory in the coming months, as our credit growth environment continues to remain quite benign."
Inflation has slowly edged up since hitting a five-year low of
3.% in September last year, partly driven by rising food and fuel prices.
The Sarb in May raised its inflation forecast and said
inflation was likely to pierce its 3% to 6% target band briefly, peaking
at 6.3% in the first quarter of 2012.
The bank said it would not hesitate to act on signs that inflation was consistently above the target band. It has left its repo rate unchanged at 5.5% this year, after reducing it by 650 basis points in the two years to December 2010. Some analysts expect the tightening cycle to begin by the end of this year.