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    Home » News » SA inflation races higher

    SA inflation races higher

    By Agency Staff20 July 2016
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    inflation-640

    South African inflation quickened for the first time in four months in June, complicating the task of the Reserve Bank as it deliberates before announcing its rates decision on Thursday.

    The inflation rate rose to 6,3% from 6,1% a month earlier, Pretoria-based Statistics South Africa said on its website on Wednesday.

    The acceleration was in line with the median of 23 economist estimates compiled by Bloomberg. Prices rose 0,6% in the month.

    Price growth has exceeded the central bank’s 3% to 6% target band since the start of the year as the worst drought in more than a century and a weaker currency put pressure on consumer prices.

    Inflation expectations, as measured by the five-year break-even rate, declined in the past two months as the rand gained against the dollar, leaving some room for the Reserve Bank to support an economy that will probably expand at 0,1% this year, according to International Monetary Fund estimates.

    The central bank has increased its benchmark repurchase rate by 125 basis points to 7% since last July.

    All 24 economists in a Bloomberg survey say the Monetary Policy Committee will keep borrowing costs unchanged this week. Forward-rate agreements are pricing in an about 10% chance of a quarter percentage point increase.

    Core inflation, which excludes food, non-alcoholic beverages, gasoline and electricity costs, quickened to 5,6% in June, also in line with the median estimate, from 5,5% the month before.

    The rand gained 0,3% to R14,29/US$ at 10a11am in Johannesburg on Wednesday. Yields on rand-denominated government bonds due in December 2016 fell two basis points to 8,8%.  — (c) 2016 Bloomberg LP

    • Reported with assistance from Simbarashe Gumbo
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