Consumer inflation eased to 5,1% year-on-year for March, compared with 5,7% year-on-year in February, Statistics South Africa (Stats SA) said on Wednesday.
The figure was in line with economists’ expectations.
Stats SA said that, on average, prices increased by 0, 8% month-on-month.
“Even though the data was better than expected, we do not expect this to translate into further easing in the repo rate,” Standard Bank Economist Danelee van Dyk commented on the data.
“Aside from the [South African Reserve Bank] Governor Gill Marcus’ recent comments implying stable interest rates, we believe that inflation expectations will have to drop by a considerable margin — say a further 0,3 to 0,5 percentage points –before another rate cut will be reconsidered,” she said.
In a similar vein, second quarter economic data would have to disappoint to bring about the same decision, Van Dyk said.
This was ascribed to the fact that the relative weakness in household demand, credit growth and asset markets had already been factored into the latest interest rate prognosis.
Van Dyk said Standard Bank expected the first interest rate hike to be in March 2011. –Sapa