South Africa’s targeted CPIX (consumer price index excluding interest rates on mortgage bonds) inflation was steady at 5% year-on-year in December, slightly below forecasts and easing pressure for higher interest rates, official data showed on Wednesday.
Statistics South Africa also said headline consumer inflation — which includes mortgage costs — accelerated to 5,8% year-on-year in December, slightly below predictions but the fastest rate of growth since June 2003.
The December CPI number was affected by a half-percentage-point hike to 9% in the central bank’s repo rate last month, which took increases since June to 200 basis points.
Analysts said the steady CPIX — the gauge has measured 5% percent for three consecutive months — reduced pressure on the central bank to raise the rate again when its monetary policy committee (MPC) meets in February.
”The number is much lower than what the market expected and this, coupled with the declining oil price, is improving the inflation outlook,” Nedbank economist Magan Mistry said.
”We now think it’s unlikely that the CPIX will breach the upper limit of the [3% to 6%] target and could encourage the MPC to leave interest rates unchanged at the next MPC meeting.”
The rand and government bonds firmed slightly after the release with the currency trading at 7,1250 to the dollar at 10h00 GMT, compared with 7,1350 shortly before the announcement.
The central bank has forecast CPIX to breach the upper end of the target range in April, but sharp falls in fuel costs on the back of lower international crude oil prices may slow inflation in the months ahead.
A Reuters poll had predicted that CPIX would rise by 5,1 % year-on-year and 0,2% month-on-month, while CPI was seen at 5,9% year-on-year. — Reuters