/ 23 March 2011

SA inflation steady at 3,7%

South Africa’s annual inflation rate remained unchanged at 3,7% in February, within the government’s target range of 3% to 6%, Statistics South Africa said on Wednesday.

“This rate was unchanged from January 2011. On average, prices increased by 0,7% between January 2011 and February,” it said in a statement.

The central bank has warned the country is still prone to a rise in inflation caused by higher oil prices in the wake of the uprisings in North Africa and the Middle East.

Razia Khan, an Africa analyst at Standard Chartered Bank, warned oil price shocks could push South Africa’s inflation close to the upper end of the target by 2012 and said the prospect of overheating prices meant the central bank could move to raise interest rates soon.

The bank has slashed the key interest rate nine times since December 2008, from 12% to 5,5%, to spur a recovery from the global financial crisis.

“We would expect the South African Reserve Bank to sound much more hawkish at this Thursday’s monetary policy committee press conference, and will be looking for clues on when we might anticipate further tightening in South Africa,” she said. — AFP