The Consumer Price Index (CPI) came in at 6.3% year-on-year in July, Statistics South Africa (Stats SA) said on Wednesday.
CPI breached the Reserve Bank’s inflation target range of between 3% and 6%. In June, CPI came in at 5.5%.
On an annual basis, the main drivers of inflation were housing and utilities (1.4%), transport (1.3%), miscellaneous goods and services (1.1%) and food and non-alcoholic beverages (1%).
Nedbank economists said that market expectation had been for inflation to breach the target range in the third quarter of 2013. Inflation is expected to return to within the target range in the fourth quarter of the year, averaging around 5.9%.
The rand, however, poses an upside risk to inflation, said Nedbank, noting that the domestic currency has recently hit a six-week low against the US dollar.
“Rising oil prices will also add to the inflationary pressure, mainly through the petrol price. Petrol is expected to account for 0.1% of the August inflation number,” said Nedbank.
Nedbank and Standard Bank expect the repo rate will remain unchanged. The Monetary Policy Committee (MPC) is scheduled to meet to discuss interest rates next month.
“We believe that rates will remain at current levels well into 2014. The MPC will need to strike a balance between high inflation and still poor economic growth outcomes, with the current policy stance likely to remain in place,” said Nedbank. – SAnews.gov.za
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