SA August inflation above expectation
September 17 2014 at 10:59am
By Rene Vollgraaff
http://www.iol.co.za/business/news/sa-au...BmGZlcXOX8
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Johannesburg - South Africa’s inflation rate unexpectedly rose to 6.4 percent in August, exceeding the central bank’s target for a fifth month.
Inflation accelerated from 6.3 percent in July, the Pretoria-based statistics office said on its website today. The median estimate of 28 economists surveyed by Bloomberg was 6.2 percent. Prices rose 0.4 percent in the month.
The Reserve Bank will probably keep its benchmark repurchase rate unchanged at 5.75 percent tomorrow, according to 17 of the 24 economists surveyed by Bloomberg. The economy is forecast to expand at the slowest pace this year since the 2009 recession after labour strikes forced mines and factories to temporarily halt operations. Inflation expectations remain anchored, the bank said in its Quarterly Bulletin last week.
The rand has lost 3.1 percent against the dollar in the past month, taking its decline since the start of 2013 to 22 percent, the worst among 16 major currencies tracked by Bloomberg.
The core inflation rate, which excludes food, non-alcoholic beverages, gasoline and electricity costs, rose to 5.8 percent in August, the highest in more than four years, from 5.7 percent in the previous month.
Economists expect rates to remain unchanged despite higher CPI
by Ntsakisi Maswanganyi , 17 September 2014, 12:11
http://www.bdlive.co.za/economy/2014/09/...higher-cpi
INFLATION rose slightly more than expected in August compared with a year ago, although economists still expect interest rates to remain unchanged on Thursday.
The Reserve Bank’s monetary policy committee started its meeting on Tuesday.
Inflation as measured by the consumer price index (CPI) rose by 6.4% year on year in August from 6.3% in July as elevated food prices weighed, Statistics SA figures showed on Wednesday. This was against market consensus of 6.2%. Food inflation was higher, despite moderating global food prices.
CPI is targeted within a 3%-6% range.
BNP Paribas Cadiz economist Jeff Schultz said the softer trends observed in global food prices, together with slowing momentum in food prices at the producer price level, still led him to believe food inflation should continue to slow into year-end.
Core inflation, which takes out food, petrol and electricity costs, increased to 5.8% year on year from 5.7%.
Standard Chartered’s head for Africa research, Razia Khan, said the latest slightly worse than expected data were unlikely to change views on interest rates.
"In terms of the detail of the CPI print, there isn’t too much that concerns us. Nor is there sufficient evidence to change our view that the Reserve Bank will most likely keep interest rates on hold," she said.
Ms Khan also said that there was some evidence from the inflation breakdown of price pressures still emanating from earlier rand weakness.
Investec chief economist Annabel Bishop also expected rates to remain unchanged, saying an interest rate hike in September so soon after the 25 basis points increase in July would not be gradual and would "contradict the Reserve Bank communication running through this year that there would only be a gradual, upward increase in the interest rate cycle".
Stats SA said the food and nonalcoholic beverages index increased by 0.8% between July 2014 and August 2014, with the annual rate increasing to 9.4% in August 2014 from 8.8% in July 2014.
Hot beverages; other food; milk‚ eggs and cheese; sugar‚ sweets and desserts; meat; vegetables; cold beverages; bread and cereals; and fruit all increased‚ while only fish prices fell.
Ms Bishop said the meat, and milk eggs and cheese categories used maize as a key feed input, so lower yellow maize prices were likely to lead to lower price inflation in these categories later in the year and early in 2015.
The transport index increased by 0.4% between July 2014 and August 2014 amid high private transportation running costs and vehicle purchases. The annual rate, however, decreased to 6.1% in August 2014 from 6.9% in July 2014, indicating some price-pressure relief from the transport index compared with a year ago.
Ms Bishop said she expected inflation to trend downward for the remainder of this year.
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