CPIX inflation (headline inflation excluding mortgage costs) was up 3,6% year-on-year (y/y) for metro and other areas in March, compared with a record low 3,1% y/y in February, Statistics South Africa said on Tuesday.
CPIX, which is used by the South African Reserve Bank for its inflation target, was expected to rise to a 3,5% year-on-year (y/y) increase in March from a record low 3,1% y/y in February, according to a survey of economists conducted by I-Net Bridge.
Economists’ forecasts for CPIX ranged from 3,1% y/y to 3,7% y/y.
John Loos, economist at Absa, said: “The figure is little bit higher than I expected. I think higher petrol prices were the main driver behind this figure. Despite being higher than expected, I don’t think it will concern the South African Reserve Bank.”
Dawie Roodt, economist at Efficient Research, said: “The CPI figure was marginally better than expected, while the CPIX was spot on our expectations, but slightly higher than the market consensus. There is nothing to be concerned about and I am fairly happy with the numbers — they are not expected to have much of an effect on anything.”
Commented Johan Rossouw, chief economist at Vector Securities: “The figures are much in line with our own forecast and market consensus in general. There has been a significant increase in the fuel price — and a lot of activity is expected to come in the next few months.
“We have commenced an upward trend, real rates will decline and this will exert some pressure on the exchange rate.”
Annabel Bishop, economist at Investec, said: “March’s CPIX inflation rate rose mainly on the back of the petrol price hike, although there were other price pressures in evidence. We expect that CPIX inflation will rise to the midpoint of the inflation target this year, and that the inflation target will be consistently achieved in 2006. We believe that interest rates will now remain on hold this year.
Said Colen Garrow, chief economist at investment bank Brait: “The March figures show that the Reserve Bank’s forecast of a bottoming in CPIX in February at 3,1% was correct. The increase to 3,6% was due mainly to the rise in the fuel price and medical and health-care costs.
“The data is not likely to prompt a change in monetary policy. There is not like to be another rate cut — rather, interest rates should move sideways for the rest of the year, and there is the possibility of a rate hike in early 2006.” — I-Net Bridge