Off the wire
• U.S. stocks open lower as oil retreats  • Dutch consulate in Istanbul closed over "possible terror threat"  • UAE ratifies WTO Trade Facilitation Agreement  • Chinese Vice Premier calls for all out preparation for 2022 Games  • Interview: Russian Far East official expects more Chinese investment  • Major Japanese companies order staff to cancel trips to Brussels in wake of terror attacks  • Bangladesh Hindus celebrate Holi festival  • China Coal Energy Company sees huge loss in 2015  • China Life 2015 profit growth sharply slower  • Xinhua, UNEP to deepen cooperation on environment, sustainable development  
You are here: 　 Home

S. Africa's inflation surges to 7 pct

Xinhua, March 23, 2016 Adjust font size:

South Africa's consumer prices index (CPI) surged to seven percent in February from 6.2 percent in January, according to figures released by Statistics SA on Wednesday.

This raised a great concern for the South African Reserve Bank (SARB) as the stubborn inflation has breached the bank's target band of three to six percent, economists said.

This was the highest rate since May, 2009 when the rate was eight percent. The CPI increased by 1.4 percent month-on-month in February 2016.

"There was a general consensus among economists on inflation jump and it reinforces the Reserve Bank's hawkish stance to put inflation in check," Rand Merchant Bank fixed income strategist Carmen Nel, told Xinhua.

Last week, SARB Governor Lesetja Kganyago hiked the repo rate by a 25 basis-point to seven percent to help keep inflation in check. The prime interest rate is now 10.5 percent.

"Inflation is expected to drop in May, but then start picking up again in the second half of the year on higher food and possibly also petrol prices, unless oil prices fall," Azar Jammine, Econometrix chief economist told Xinhua.

He predicted inflation to hit double-digits fuelled by increases in food prices.

The inflation surged amid the increase in petrol price, expected to increase by 41 cent per litre in April.

"This is going to affect all sectors of the economy and slow it down even further. As far as consumers are concerned, food prices are going to have a very big impact," said Efficient Group Chief Economist Dawie Roodt.

The breaching of the target band is expected to hit hard on the volatile rand which has depreciated against major currencies. The rand traded at R15.3344 to the dollar from R15.2090 at Tuesday's close.

The food and non-alcoholic beverages index rose 8.6 precent year-on-year, alcoholic beverages and tobacco 7.6 percent and transport 8.7 percent

The miscellaneous goods and services index increased by 6.8 percent year-on-year, with goods inflation at 7.9 percent -- accelerating from 6.5 precent in January -- and services inflation increased at 6.1 precent, up from six percent in January. Endit