Consumer inflation rose in February, driven up by the costs of housing and utilities, food and non-alcoholic beverages and transport, exceeding economists’ expectations.
Annual inflation was 5.6% year-on-year in February compared with 5.3% the month before, Statistics South Africa said on Wednesday. On a month-on-month basis, prices rose by 1.0%.
The main contributors to the year-on-year change were miscellaneous goods and services, which rose 8.4%, as well as food and non-alcoholic beverages (6.1% y/y), transport (5.4% y/y) and housing and utilities (5.8% y/y).
Economists at Investec had projected a 5.4% annual increase for February, and a 0.8% month-on-month rise, citing mainly fuel prices. Analysts at Nedbank expected the inflation rate to remain steady in February, also citing the cost of fuel as a key factor.
The price of petrol rose by 75 cents a litre in February, and another R1.21 in March. April is on course for a much smaller increase of about 14 cents a litre, according to Investec, on the back of a lower international Brent crude oil price.
StatsSA said core inflation, which excludes food and fuel prices, accelerated to 5.0% in annual terms in February, from 4.6% in January, while food inflation eased to 6.1% from 7.2%.
The outlook for inflation will be central when the South African Reserve Bank’s monetary policy committee (MPC) meets next week to make a decision on interest rates.
In January, the MPC unanimously decided to keep its benchmark repo rate at 8.25% for the third consecutive policy meeting month.The bank noted that returning the inflation rate back to within its 3% to 6% target band had been a slow process.
Investec chief economist Annabel Bishop said she believed the central bank would not cut interest rates next week or at the next policy meeting in May, with July likely to offer the first opportunity to do so.