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South African Inflation Rate Rises to Target Midpoint in March

South African Inflation Rate Rises to Target Midpoint in March

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South Africa’s annual inflation rate rose to the midpoint of the target range in March as a recent surge in the oil price pushed up gasoline costs.

Consumer prices climbed 4.5 percent from a year earlier compared with 4.1 percent in February, the Pretoria-based Statistics South Africa said Wednesday in a statement on its website Wednesday. The median estimate of 16 economists in a Bloomberg survey was 4.6 percent.

South African Inflation Rate Rises to Target Midpoint in March

Key Insights

  • The uptick in inflation could make the Monetary Policy Committee, which hasn’t had any member vote for easing rates since March last year, even more steadfast on its tight stance.
  • The Reserve Bank targets inflation in a band of 3 percent to 6 percent and while the rate has now been inside this range for two years, the MPC has made it clear that it wants to see price-growth expectations anchored at the 4.5 percent midpoint.
  • At last month’s interest-rate announcement, when the central bank held the benchmark at 6.75 percent, it said that it sees inflation at an average of 4.8 percent for 2019. Its quarterly projection model prices in one rate increase of 25 basis points by year-end.
  • The gasoline price in South Africa’s economic hub of Gauteng rose 7.7 percent from a year earlier in March, adding to inflation. It increased 11.4 percent in April from the year before and estimates from the Central Energy Fund show it could go up further next month.
  • Prices rose 0.8 percent in the month. Annual core inflation, which excludes the cost of food, non-alcoholic beverages, fuel and electricity, was unchanged at 4.4 percent.

--With assistance from Simbarashe Gumbo and Londell Phumi Ramalepe.

To contact the reporter on this story: Prinesha Naidoo in Johannesburg at pnaidoo7@bloomberg.net

To contact the editors responsible for this story: Rene Vollgraaff at rvollgraaff@bloomberg.net, Ana Monteiro

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