South Africa’s targeted CPIX inflation rate quickened to 8,8% year-on-year in January from 8,6% in December, above forecasts, data showed on Wednesday.
The all-items consumer price index (CPI) increased by an annual rate of 9,3%, compared to 9% in December, Statistics South Africa said.
On a monthly basis, CPIX rose by 1,2% in January, compared to 0,7% growth previously, while headline CPI increased by 1,1% month-on-month.
A Reuters poll forecast CPIX would slow to 8,4% year-on-year and predicted a rise of 0,9% month-on-month.
Economists react
Dawie Roodt, an economist at Efficient Group, said he expected the figure to accelerate in the next couple of months, reaching a turning point of 9% in March and April.
”But with the latest movements in the oil price, it could go higher.
”If we are lucky, it could dip below 6% next year.”
Ridle Markus, an economist at Absa, said the figure was a ”shocker”.
”The inflation outlook continues to deteriorate especially with all the prices continuing to rise as well as sharp rises in the fuel price expected in the next few months.
”This now reduces any hopes of a rate cut in 2008.”
Danelee Van Dyk, economist at Standard Bank, echoed Markus’s concerns and said the CPIX was unlikely to return to the target band this year.
”But we hope the Reserve Bank will bite the bullet in term of interest rates.”
Mike Schussler, an economist at T-Sec said: ”We are in a high inflationary environment and it looks like this could lead to higher interest rates. This news will not be good for the rand or bond market.
”People are underestimating the runaway effect of inflation — we are in a very, very difficult situation. You could say we are in a stagflation environment where growth is not moving and inflation is taking off.” – Reuters, Sapa