Consumer inflation rose gently to 4% last month from 3.9% in February in what economists predict is the start of an upward trend.
Inflation could even breach the 3%-6% target this year‚ according to some economists‚ which could lead to an interest rate increase before the end of the year.
Rand weakness‚ electricity tariff hikes and higher food prices owing to local droughts were among factors that could see inflation breach the target band later this year‚ ETM Analytics economist Manisha Morar said on Wednesday. The rise in inflation to 4% was the first in six months.
It was due to higher oil and petrol prices and increases in the prices of administered services such as education. Education inflation rose at an alarming rate‚ Statistics SA figures show.
It found the cost of education rose by 9.3% in March this year compared with March last year – 5.3 percentage points higher than the headline inflation figure of 4%‚ indicating households would have to “make more room in their budgets” to pay for tuition fees. Education inflation has constantly outstripped general inflation‚ Stats SA figures show.
Lower inflation and stable interest rates are among factors that support consumer confidence and spending.
The Reserve Bank‚ which for now sees inflation remaining within the target band for the rest of the year‚ last raised rates in July by 25 basis points.
The bank needed to raise interest rates sooner‚ rather than later‚ before inflation started accelerating and “prices rise far quicker than people’s wages‚ which would slow down economic growth”‚ said UFX.com managing director Dennis de Jong.
The rise to 4% was against a median consensus forecast of 4.1% from a survey of 13 economists. Core inflation – which excludes food‚ electricity and petrol prices – slowed to 5.7% year-on-year in March from 5.8% in February.
One of the main factors that will see inflation rise this month is a R1.62c/l increase in the petrol price.
Food prices are expected to rise in coming months and add to the acceleration in inflation. Food makes up a significant share of the consumer price index basket with a weight of 14.2%.
Grain SA estimates SA may have to import 838000 tons of maize this year.
A weaker rand will make imports more expensive.
“Inflation is likely to increase as maize prices continue to remain supported on the back of low harvests due to current drought‚” Grain SA economist Wandile Sihlobo said.
Stats SA said the food and non-alcoholic beverages index increased by 0.8% from February to March while the annual rate fell to 5.8% from 6.4%.
The prices of fruit‚ vegetables‚ bread‚ meat and fish increased.
The housing and utilities index rose mainly on an increase in housing rentals and owners’ equivalent rent.
The transport index was up mainly due to a 96c/l hike in the petrol price last month.
Expectations are the rand would weaken further and‚ as oil prices could go slightly above $60 per barrel‚ petrol prices could rise in the second half. — BDlive
SA consumers feel the pinch
Inflation could even breach the 3%-6% target this year‚ according to some economists‚ which could lead to an interest rate increase before the end of the year.
Rand weakness‚ electricity tariff hikes and higher food prices owing to local droughts were among factors that could see inflation breach the target band later this year‚ ETM Analytics economist Manisha Morar said on Wednesday. The rise in inflation to 4% was the first in six months.
It was due to higher oil and petrol prices and increases in the prices of administered services such as education. Education inflation rose at an alarming rate‚ Statistics SA figures show.
It found the cost of education rose by 9.3% in March this year compared with March last year – 5.3 percentage points higher than the headline inflation figure of 4%‚ indicating households would have to “make more room in their budgets” to pay for tuition fees. Education inflation has constantly outstripped general inflation‚ Stats SA figures show.
Lower inflation and stable interest rates are among factors that support consumer confidence and spending.
The Reserve Bank‚ which for now sees inflation remaining within the target band for the rest of the year‚ last raised rates in July by 25 basis points.
The bank needed to raise interest rates sooner‚ rather than later‚ before inflation started accelerating and “prices rise far quicker than people’s wages‚ which would slow down economic growth”‚ said UFX.com managing director Dennis de Jong.
The rise to 4% was against a median consensus forecast of 4.1% from a survey of 13 economists. Core inflation – which excludes food‚ electricity and petrol prices – slowed to 5.7% year-on-year in March from 5.8% in February.
One of the main factors that will see inflation rise this month is a R1.62c/l increase in the petrol price.
Food prices are expected to rise in coming months and add to the acceleration in inflation. Food makes up a significant share of the consumer price index basket with a weight of 14.2%.
Grain SA estimates SA may have to import 838000 tons of maize this year.
A weaker rand will make imports more expensive.
“Inflation is likely to increase as maize prices continue to remain supported on the back of low harvests due to current drought‚” Grain SA economist Wandile Sihlobo said.
Stats SA said the food and non-alcoholic beverages index increased by 0.8% from February to March while the annual rate fell to 5.8% from 6.4%.
The prices of fruit‚ vegetables‚ bread‚ meat and fish increased.
The housing and utilities index rose mainly on an increase in housing rentals and owners’ equivalent rent.
The transport index was up mainly due to a 96c/l hike in the petrol price last month.
Expectations are the rand would weaken further and‚ as oil prices could go slightly above $60 per barrel‚ petrol prices could rise in the second half. — BDlive
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