South Africa’s targeted CPIX inflation rate rose by 8,8% in the year to April compared to 8% in the year to March, official data showed on Tuesday, cementing expectations of a third rate hike this year.
The figure came in just higher than consensus forecasts of analysts polled by Reuters who had predicted an annual increase of 8,7% in the index, which eliminates the impact of changes in home loan rates.
It was the sixth consecutive month the index rose outside its official target range of three to six percent.
”It was higher than we were forecasting, and I think this reinforces expectations that the SARB (South African Reserve Bank) will tighten interest rates at its June MPC (Monetary Policy Committee) meeting,” said Peter Worthington, economist at CSFB.
The Reserve Bank has hiked its key repo rate by a total of 200 basis points so far this year in an effort to stem the inflationary impact of the rand’s 37% plunge against the dollar, mostly at the end of last year.
But the rand has clawed back more than 15% of its value this year and analysts are suggesting that the predicted June rate hike will be the last.
The rand and bond markets shrugged off the numbers, which traders said had been largely discounted.
The yield on the key R150 bond was at 11.89% by 0940 GMT, sticking to levels seen shortly before the release of the consumer price index data. The rand was bid at 10,06 compared to 10,08 shortly ahead of the data.
South Africa’s headline consumer price index (CPI) rose by an annual rate of 8% — up from 6,6% in March and versus expectations of an 7,7% increase. It was the highest rate of increase since February 1999.
Core inflation — which excludes food prices as well as home loan rates, value-added tax and municipal rates — increased by 8% against a 7,6% gain in March and market forecasts of a 8,1% rise. – Reuters