Inflation eases back into target band

JOHANNESBURG, SOUTH AFRICA - Mar 24 2010 10:09

Consumer inflation eased back into the South African Reserve Bank's target band of 3% to 6% in February, data released by Statistics South Africa on Wednesday showed.

Consumer price index (CPI) for February 2010 slowed to 5,7% year-on-year from 6,2% in January 2010, the Pretoria-based agency said.

Headline CPI came in at 0,6% on a monthly basis in February.

"The number for February came in slightly higher than we expected but it was in line with market expectations," Nedbank economist Carmen Altenkirch said.

Consumer inflation would stay in the target band for the rest of the year, she said.

"I think it will reach a trough in May, fall below 5% and then it'll start to pick up in the second half of the year ending 2010 at 5,5%."

Altenkirch said the Fifa World Cup would probably have only a limited impact on food inflation but it could have a larger impact on the hotels and restaurant categories as well as recreation.

She said it was not easy to predict the effect of the soccer tournament on consumer inflation.

"The World Cup is confined to a few major cities in South Africa and consumer price inflation takes in the whole of the country," she said. -- Sapa

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