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S. Africa's CPI increases to 6.4 percent

Xinhua, November 24, 2016 Adjust font size:

South Africa's consumer inflation moved outside the Reserve Bank's 3-6 percent target range in October, as some economists had expected.

According to figures released by Statistics South Africa on Wednesday, the consumer price index increased to 6.4 percent in October, up from 6.1 percent increase reported for September.

The figure is used by the Reserve Bank to determine whether or not to increase interest rates.

Core inflation, which excludes the price of food, non-alcoholic drinks, petrol and energy, increased slightly to 5.7 percent.

"Food price inflation, coming from 11.7 percent on a year-on-year basis, has obviously been exacerbated by the drought conditions that we've had earlier this year," Independent economist Mohammed Nalla told Xinhua on Wednesday.

"And hopefully the kind of rain that we've been getting more recently will lead to a massive alleviation in terms of food pricing inflation over the course of the coming months," Nalla added.

The SA Reserve Bank's (SARB) Monetary Policy Committee (MPC) is expected to leave interest rates steady without calling an end to the rate-hike cycle as uncertainty from Donald Trump's election as U.S. president to local political uncertainty keeps the rand volatile.

At previous meetings the Bank has said that although consumer inflation has consistently been higher than the target for most of this year, it seemed stable at those levels.

Many economic experts believe that with the stubborn inflation raising the Bank is will leave the repurchase rate at 7 percent.

Elize Kruger, an economist for KADD Capital, does not expect many changes and surprises because of the uncertainties.

"I don't think we have any option, but a hike should not even be considered, because of the sluggish economic growth, I don't think they will even discuss that," said Kruger. Endit