South Africa’s targeted consumer inflation slowed less than expected to 8,4% year-on-year in April from 8,5% in March, official data showed on Wednesday.
Statistics South Africa said headline CPI inflation stood at 0,5% on a monthly basis in April compared with 1,3% the previous month.
A Reuters poll of 18 economists forecast CPI would slow to 8,3% year-on-year and come in at 0,4% on a monthly basis.
From January, a revised and re-weighted CPI replaced CPIX — which stripped out mortgage costs — as the central bank’s targeted inflation measure.
Mike Schussler, an economist at economists.co.za, said it had been a week of shocks.
”Although this figure is not as big a shock as the GDP figure, it’s a sticky number that puts the cat among the pigeons again. It will not be good for the rand or the bond market, and it also means that we may not get the massive interest rate hike some were looking for. It’s going to make people sit up and think.”
Doret Els, an economist at the Efficient Group, said the figure was above the market consensus.
”It shows that prices are still very sticky to show a significant slowdown. It is worrisome if we look to see inflation below 6% in the third quarter.”
Carmen Altenkirch, economist at Nedbank, said although the figure was above market expectations, the 8%level showed that ”things are much stickier than previously assumed, given
consumer reduction”.
Annabel Bishop, economist at Investec, said she believed that CPI inflation will fall back with target by the end of Q3.09.
”Combined with the recent GDP figures showing how severe the recession was in Q1.09 [and various leading indicators pointing to 2009 as a whole remaining in recession], we believe the SARB will cut interest rates by 100bp this week and by another 100bp in June. This represents an official change of view for our June 2009 interest rate forecast; previously we expected a 50bp cut in that month.” – Reuters, I-Net Bridge