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Consumer inflation is back above the Reserve Bank target
Consumer inflation is back above the Reserve Bank target

Consumer inflation is back above the Reserve Bank target

ECONOMIC NEWS

bdlive.co.za - Oct 19th 2016, 16:05

Consumer inflation accelerated in September, rising back above the 6% upper limit that the Reserve Bank targets when setting interest rates. 

Consumer inflation accelerated in September, rising back above the 6% upper limit that the Reserve Bank targets when setting interest rates.

The consumer price index (CPI) rose 6.1% in September compared with a year earlier, Statistics SA said on Wednesday, after a 5.9% increase in August and a 6% rise in July.

The September acceleration was not unexpected, with economists pointing to a smaller decrease in the petrol price as one of the factors. The Bloomberg consensus was for an increase of 6.2% while Trading Economics forecast a 6.1% rise.

The contribution of the transport component doubled, to 0.6 percentage points in September from 0.3 percentage points in August, and the transport index increased 3.5% from a year earlier in September.

“A petrol price hike of 47c a litre is currently building for November, on higher oil prices as a recovery in the commodity cycle is taking hold in the second half of 2016,” Investec’s Annabel Bishop said on Wednesday.

She pointed out that food inflation remained high, at 11.6%, but could be expected to ease next year, as improved rainfall eases shortages.

Although inflation has breached the 3%-6% target range for much of this year, the Reserve Bank considers it to be stable and expects it to fall back within the target next year. As a result, monetary policy has tended to focus more on the need to improve economic growth.

"A more benign CPI inflation environment will provide some relief to the financial position of households," Investec economist Kamilla Kaplan said last week.

South African households’ net wealth continued to decline in the second quarter, as debt and purchases became harder to afford and households’ assets performed poorly.

The value of household net wealth in real terms fell by R44.5bn to R7.063-trillion in the second quarter, the Momentum/Unisa South African household wealth index showed on Tuesday.

Stats SA said on Wednesday that CPI rose 0.2% in September compared with August.


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Read more about: inflation | cpi

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