South Africa’s consumer price index excluding mortgage rate changes (CPIX) for metro and other areas, which is used by the South African Reserve Bank for its inflation target, rose by 3,8% year-on-year after increasing by 3,6% in March, Statistics South Africa said on Wednesday.
It had been expected to rise to a 4% increase in April, according to a survey of economists conducted by I-Net Bridge. Economists’ forecasts for CPIX ranged from 3,8% to 4,3%.
Annabel Bishop, economist at Investec, said: “April’s CPIX inflation rate rose mainly on the back of the petrol-price hike. We expect that CPIX inflation will rise toward the midpoint of the inflation target in the third quarter of 2005, but that the inflation target will be consistently achieved in both 2005 and 2006.
“Our central forecast is that interest rates will now remain on hold this year, with the risk to this forecast being another 50 basis-point cut in either August or October.”
Mike Schussler, economist at T-Sec, said: “This is a very good figure. I think it will be good for the bond market. This also holds the hope for a further interest rate cut.”
According to Colen Garrow, economist at Brait, “the number is very positive”.
“It should revive speculation of a rate cut, although I’m personally doubtful that we will get a cut. Inflationary pressures are certainly very subdued in this economy,” Garrow said.
Absa economist Chris Hart said: “We are starting to see the end of the worst of the oil-price hikes. Inflation remains benign. There is little that stands in the way of further interest-rate cuts in 2005. We see a cut of 50 basis points at the August [monetary policy committee] meeting.”
Elna Moolman, economist at Standard Bank, commented: “Inflation numbers are always slightly lower than our expectations and this time we expected 3,9% year-on-year.
“What is important, though, is the fact that the medium-term inflation forecast remains within the inflation target range. I am happy with the figures, although there are certain risks that might prevent the Reserve Bank from cutting again; they’re not inflation-related but they’ll threaten a cut anyway.” — I-Net Bridge