Measures to deal with surging South African consumer prices will hurt but central bank policymakers are not ”inflation nutters”, Reserve Bank Governor Tito Mboweni said in an article published on Monday.
Mboweni said that reasons for an acceleration in inflation were broader than just food and fuel costs.
The central bank has raised its repo rate by 500 basis points to 12% in an effort to arrest inflation which has stayed above the 3% to 6% band since April 2007.
Asked if there was more to come, Mboweni told the Herald newspaper: ”Yes — and it will be painful.”
But he stressed that the central bank’s monetary policy committee were not ”inflation nutters”.
”We are flexible and hope that the population can join hands with us and solve the problem,” he said, adding: ”When people say that inflation is caused only be food and oil, that is not true.”
Mboweni also criticised a decision by the National Energy Regulator of South Africa to raise power prices by an average 27,5% from July 1 to help Eskom fund its multibillion-rand spending on generating capacity as it struggles to meet demand.
Two weeks ago Mboweni said only a 6% tariff rise would be appropriate and anything above that would stoke inflation.
Targeted inflation surged to a five-and-a-half year high of 10,4% in April and an economists projected in a Reuters poll that it would had risen to 10,8% in May. – Reuters