Weakened rand drives inflation

Consumer inflation accelerated as expected to 5.2% year on year in December, from 4.8% in November, Statistics SA data showed on Wednesday.

Inflation was up 0.3% month on month in December.

The 5.2% increase in the consumer price index, which was the quickest pace of acceleration in a year, reflected higher food, petrol, and household services costs.

A weak rand has caused a deterioration in the inflation outlook and is the reason behind forecasts for the Reserve Bank to raise interest rates next week.

The Bank raised rates by a cumulative 50 basis points last year on rising inflation concerns.

Inflation averaged 4.6% in 2015 compared with 6.1% in 2014.

Food and non-alcoholic beverages inflation accelerated from 4.8% year on year in November to 5.9% in December.

Household contents and services prices rose 3.5% year on year in December, faster than November’s 3.1% increase.

Transport inflation also accelerated after a marginal rise in the petrol price last month.

Goods inflation was 4.6% year on year in December from 3.8% in November, and services inflation increased by 5.7% year on year in December, unchanged from November. — BDlive