S. Africa inflation increases to 4.8 percent

South Africa's consumer price inflation (CPI) rose steadily to 4.8 percent in November 2015, up from 4.7 percent in October, according to data released on Wednesday.

As expected by many economists, inflation increased by 0.1 percent month-on-month in November, Statistics SA (Stats SA) said.

Although inflation still remains within the central bank's target of three to six percent, it has become a concern for the bank, as it keeps on rising, economists said.

"The Reserve Bank expects it (inflation) to breach the target in the first quarter of next year," Annabel Bishop, Investec chief economist told Xinhua.

"Inflation expectations are driven by these exogenous factors over the period, and so will not be much impacted by raising interest rates," she added.

In November, the CPI for goods increased by 3.8 percent year-on-year (3.7 percent in October), and the CPI for services increased by 5.7 percent year-on-year (5.6 percent in October), Stats SA said.

The stubborn inflationary pressures led the Reserve Bank to hike the repurchase rate by 25 basis points last month for an accumulative 125 basis points.

Core inflation, which excludes food, non-alcoholic beverages, gasoline and electricity costs, slowed to 5.1 percent in November, the lowest rate of increase in prices since August 2013, Stats SA said.

Inflation was expected to rise at 6.1 percent in February next year, breaching the targeted six percent mainly because of the falling rand and the ever increase of food prices, according to Isaac Matshego, a Nedbank economist.

A lower oil price as well as a much less drastic pass-through from a weaker rand to inflation had kept inflation forecasts relatively contained, the economist said.

Food was the main contributor to the monthly increase in inflation. Food prices are increasing because of the current drought which forced many farmers to reduce production and the country to import maize. Endit