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14 Dec 2010 14:36
South Africa’s targeted consumer inflation quickened slightly more than expected in November, but analysts said it was still likely to ease in coming months and could allow another interest rate cut.
Statistics South Africa said on Tuesday that Consumer Price Index (CPI) accelerated to 3,6% year-on-year in November from 3,4% in October. The November CPI was above forecasts of 3,5%.
On a month-on-month basis, CPI was at 0,2%, unchanged from October and also above market expectations of a 0,1% figure.
Petrol prices went up by 2,5% in November.
Analysts said the uptick in inflation could be short-lived and another interest rate cut was still possible as a strong rand will help keep inflation in check.
“For the second consecutive month you’ll see some upward pressure from petrol prices.
But going forward, there’s domestic and external considerations that we expect to come about and let inflation go lower,” said Kamilla Golda, economist at Econometrix Treasury Management.
“The strong rand, coupled with low domestic money supply and credit growth, will contribute to inflation edging lower,” she said, adding the Reserve Bank may still cut rates in the first half of next year.
The central bank has lowered the repo rate by a cumulative 650 basis points in the past two years to 5,5%.
The rand currency has gained nearly 30% since the beginning of last year, helping to push CPI to a 5-year low of 3,2% in September.
The rand was trading at 6,8370 against the dollar at 9:48 GMT, from 6,8350 before the data was released at 9:30 GMT.
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