Consumer inflation increases to 5.5%

Pretoria – The Consumer Price Index (CPI) rose to 5.5% in September, Statistics South Africa (Stats SA) said on Wednesday.

“Headline CPI (for all urban areas) annual inflation rate in September 2012 was 5.5%. This rate was 0.5% higher than the corresponding annual rate of 5% in August 2012,” said Stats SA.

Market expectation was that CPI would accelerate to 5.2% year on year.

According to Stats SA, the housing and utilities index which increased by 0.7% between August and September mainly due to a 1.4% increase in actual rentals for housing and a 1% increase in owners’ equivalent rent and the transport index contributed to the annual increase.

On average, prices increased by 0.9% between August and September 2012.

Nedbank economists expect inflation to remain around the 5% to 5.5% range for the remainder of the year with soft spending and a weaker global economy likely to keep inflation contained.

“We think that the [Monetary Policy Committee] will keep rates unchanged for the remainder of the year. The decision to either cut rates or keep them steady will depend on whether the combined global monetary stimulus sparks some recovery later in the year, in which case rates are likely to remain stable.

“If the global economy slips into recession then further easing can be expected. Our baseline view is that rates will remain stable with some reversal in policy easing possible in late 2013 or even early 2014,” said Nedbank.

The Reserve Bank’s Monetary Policy Committee will hold its last meeting for the year from 20 to 22 November. – SAnews.gov.za