OWN CORRESPONDENT, Johannesburg | Monday 12.40pm
THE Consumer Price Index for November released on Tuesday showed consumer prices rose 1,9% year-on-year compared with a 1,7% rise in October.
Core inflation rose 8,1% year-on-year versus 8 percent in October.
Economists are mixed about how to read the data.
”It is worse than we had been looking for. But food prices were a lot higher and non-farm items were up only 1,6% year-on-year. So a big chunk of the higher-than-expected headline number is due to food. I don’t think that the picture has changed dramatically and we would still expect core to drift down to 6.0-6.5 percent by the end of 2000,” said JP Morgan’s Peter Worthington.
PSG Investment Bank’s Noelani King agrees the figures are worse than expected, but says there’s nothing to be concerned about.
”The core figure is in line with expectations that core inflation will first move higher before it drops off.”
”The figures do not alter the short to medium-term expectations on interest rates but do reinforce the view that we are near the bottom of the interest rate cycle.”
”They add fuel to the belief that interest rates will start to move higher in the latter half of next year.”
However, other analysts including Nedcor’s Kevin Lings, says the data’s what was expected.
”This number is pretty much in line with expectations. The fact that they have gone up is not too concerning because they are coming off a fairly low base.”
”The headline number is suggestive of an extremely weak inflationary environment and there are no concerns right now of a build up of inflationary pressures.”
”That may well occur during the course of next year as the economy gains momentum. But at the moment there is nothing to suggest a build up of inflationary pressure, it is below two percent and it is a very acceptable number. In the next couple of months that number will increase.”
”The core number, I think, is reflecting the steady increases in fuel and oil prices we have had over the past few months. That number is on the high side and it should start to work down during the course of next year if we don’t have a dramatic increase in the fuel price.” — Reuters