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S. Africa's consumer inflation slows in January

Xinhua, February 15, 2017 Adjust font size:

South Africa's consumer inflation slowed in January after steadily accelerating for four months, according to the report published by Statistics South Africa on Wednesday.

Inflation, as measured by the consumer price index (CPI), moderated to 6.6 percent in January from December's 6.8 percent. Many economic experts expected inflation to slow down to 6.7 percent.

"The easing of bread and cereals inflation is in line with the decline in grain prices. White maize spot prices are currently at levels around R2,860 per tonne, which is 40 percent lower than the corresponding period last year," Wandile Sihlobo, an local economist with Agbiz told Xinhua on Wednesday.

"Wheat spot prices are at levels of R4,000 per tonne, which is a 13 percent annual decline," he added.

Sihlolo expects food inflation to remain "sticky" at these current high levels over the next few months, with notable deceleration expected later in the year.

"This is partly on the back of lag effect on grain prices, as well as expected higher meat prices. The deceleration later in the year is due to expected recovery in grain production, with our maize production estimate at 11.9 million tonnes, a 53 percent annual increase," he said.

According to the report, the index, which was reset to 100 points in December, came in at 100.6 points for January.

After decelerating under the Reserve Bank's ceiling of 6 percent in August, inflation steadily accelerated for four months to peak at 6.8 percent in December.

The food component of CPI showed inflation of 11.8 percent in January from the same period in 2016. The highest inflation in Stats South Africa's basket of goods used to calculate CPI was sugar, sweets and deserts whose average price rose 21.4 percent over the year.

Food and non-alcoholic beverages increased from 1.8 percent in December to 1.9 percent in January. The index increased by 11.4 percent year-on-year.

Transport increased from 0.9 percent in December to 1 percent in January. The index increased by 6.7 percent year-on-year.

Alcoholic beverages and tobacco decreased from 0.3 percent in December to 0.2 percent in January. The index increased by 3.5 percent year-on-year. Endit