South Africa’s factory-gate inflation jumped to 10,3% year-on-year in March, official data showed on Thursday, above forecasts and raising the risk that interest rates may have to rise again.
Producer inflation climbed from 9,5% in February to its highest level in almost four years, largely due to higher fuel costs, Statistics South Africa said.
On a monthly basis, the index increased by 1,2% after falling 0,1% the previous month.
Analysts said the higher-than-expected number backed the case for a resumption in rate increases after the central bank left the repo rate steady at its last two meetings, in February and April.
”It’s very disappointing and it will just fuel concern that the Reserve Bank may still need to hike interest rates one more time,” ETM economist George Glynos said.
”If these kind of inflationary pressures persist they are going to be forced to hike rates, even though it’s not what they want to do.”
The data follows a largely expected surge in the targeted CPIX measure — consumer inflation minus mortgage costs — on Wednesday to 5,5% year-on-year for March from 4,9% in February. The figure was the highest in three-and-a-half years.
The Reserve Bank has forecast CPIX to peak at 5,9%, within its 3% to 6% target range, but a steeper rise will put the upper limit of the band in jeopardy.
Economists polled by Reuters had forecast that annual PPI would come in at 9,7%. — Reuters