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S. Africa Aug. inflation falls below 6 pct

Xinhua, September 21, 2016 Adjust font size:

South Africa's consumer inflation slowed to 5.9 percent year on year in August, from the six percent reported in July, data released on Wednesday showed.

Contributors to the annual change of 5.9 percent in CPI were food and non-alcoholic beverages at 1.7 percent, housing and utilities at 1.4 percent and miscellaneous goods and services at 1.1 percent, among others, according to data from the Statistic South Africa.

According to Statistics South Africa, food and non-alcoholic beverage inflation was 11.3 percent, but food inflation, which alone carries a 14 percent weight on the CPI basket, rose slightly to 11.6 percent year on year in August from 11.5 percent in July.

The ease in inflation in August was within the expectations of many economists.

"We expected the CPI (consumer price index) inflation rate to decline in the month of August compared with July. One of the factors for expecting this decline was due to the fact that the petrol inflation declined in the month of August compared with July," Laura Campbell, an economist at consulting firm Econometric, told Xinhua.

She expressed belief that the South African Reserve Bank (SARB) will not increase rates when it concludes its meeting on Thursday.

"Inflation has been coming down and as a result we are not expecting the Reserve Bank to hike rates," said Campbell.

Lesiba Mothata, a chief economist at Investec, concurred with Campbell, saying the current strength of the rand would not see the Reserve Bank hike the repo rate.

"The local currency has appreciated and is stable. As a result of that, I don't expect any further interest-rate hikes in this tightening cycle," Mothata said.

However, despite the overall moderation in August, South Africa's inflation still remains at the upper end of, or outside, the three percent to six percent target band. It has been outside the Reserve Bank's target of three to six percent since the beginning of 2016, and was just within it in July. Endit