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Consumer inflation forecast at six percent in May
Consumer inflation forecast at six percent in May

Consumer inflation forecast at six percent in May


Business Live - Jun 18th 2012, 08:51

The consumer price index (CPI) is expected to have registered six percent year on year in May from 6,1% in April, according to a survey of leading economists. 

The CPI — the measure used by the Reserve Bank for its inflation target — was forecast by the 13 economists surveyed to have registered growth of between 5,8% and 6,2% in May.

The weaker rand is expected to fuel further increases in the food and non-alcoholic beverages component of the index.

“Food prices are expected to start accelerating again on back of the weaker rand,” said Jana le Roux, economist at ETM Analytics .

Efficient Group senior economist, Dawie Roodt, expected a 6,1% y/y figure for May, with CPI remaining at these levels throughout 2012 and ending the year at an average of 5,3%.

The Reserve Bank expected inflation to average 6,0% in the second quarter and 2012 as a whole, then moderate to 5,5% in 2013.

Elize Kruger, economist at KADD Capital, said the main monthly CPI driver in May, normally a low survey month, was likely to be the 28c-a-litre increase in the petrol price.

Ms Kruger also expected food prices to have added some upward pressure.

“The combination of higher fuel and higher food prices could result in a 0,3% month-on-month increase in CPI,” she said.

The food, non-alcoholic beverages and transport indices were among the highest contributors y/y in April, with the transport index increasing mainly due to a strong petrol price hike.

While the correlation between CPI and the producer price index (PPI) has weakened, the softer rise in producer prices was pointing to reduced inflationary pressures, according to Econometrix chief economist Azar Jammine.

Producer inflation growth has slowed in recent months, reaching a 6,6% annual rise in April, from 7,2% in March and 8,3% in February.

Annual CPI registered five percent in 2011, from 4,3% in 2010 and 7,1% in 2009. CPI was 11,5% in 2008.

May’s consumer inflation data will be released by Statistics SA at 10am on Wednesday, 20 June. 

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