Inflation in South Africa increase to 5.9%

Annual consumer price inflation (CPI) in South Africa climbed to 5.9% in October from 5.4% in September, edging closer to the outside of the South African Reserve Bank’s (SARB's) targeted band of 3% to 6%, marking a third consecutive increase. The figure was higher than economists expected.

"South African headline inflation jolts the market by printing much higher than the consensus had expected in October. Although fuel price pressures were widely anticipated, no-one had forecast a spike back in year-on-year headline inflation, almost to the upper end of the SARB’s inflation target," Razia Khan, managing director and chief economist for Africa and Middle East at Standard Chartered Bank, said.

The main contributors to the increase were food and non-alcoholic beverages, which rose 8.7% year-on-year, housing and utilities, transport, and miscellaneous goods and services.

CPI is now at its highest level since May this year and will be one of the factors the Monetary Policy Committee (MPC) meeting will have to consider as it makes its final decision on interest rates on Thursday afternoon. The consensus among economists before the CPI number was that the MPC will keep rates on hold at 8.25%, a 14-year high, with relief only coming in the second or third quarters of next year. –Fin24