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S. Africa inflation rises to 6.8 percent in December

Xinhua, January 19, 2017 Adjust font size:

South Africa consumer inflation increased 6.8 percent in December year on year, above the central bank target of 3 percent to 6 percent, according to South African Statistics (Stats SA) on Wednesday.

The consumer price index (CPI) figures were inline with 6.5 percent predictions by many economists.

"On average, prices increased by 0.4 percent between November 2016 and December 2016," Stats SA states.

The South Africa reserve bank expects the consumer inflation outlook will come back within the 3 percent to 6 percent target range in 2017 when it is slowing down to 5.8 percent, and easing further to 5.5 percent in 2018.

CPI increased by 0.4 percent between November and December.

According to the reserve bank, the food inflation remains high because of the effects of devastating drought of last year.

Food and nonalcoholic beverages inflation was 11.7 percent year on year, picking up slightly from 11.6 percent in November.

The transport component of the CPI increased 5.7 percent in December from a year ago. The housing and utilities component increased by 1.3 percent in November compared to 1.4 percent in December while the subindex increased by 5.6 percent year on year.

Stats SA said that if CPI came in as expected below the 0.06 percent upper band throughout the year, on lower food inflation, this would provide the reserve bank with some impetus for a flatter interest rate profile this year. The bank's monetary policy committee is meeting next week.

The consumer price index was at 124.7 points in December 2016, compared with 116.8 in December 2015. Endit