CPI expected to be 6.3% year on year in February
Business Live - Mar 20th 2012, 08:44
he consumer price index (CPI) - the measure used by the South African Reserve Bank (SARB) for its inflation target - is expected to have remained unchanged at 6.3% year on year (y/y) in February, according to a survey of leading economists by I-Net Bridge.
Forecasts among the eleven economists ranged from 6.2% to 6.6%.
Absa Capital economists said that further price pressures in food and transport, mainly fuel, together with price surveys in healthcare inflation, were likely to have driven the month-on-month uptick in prices.
Ilke van Zyl, economist at Investec Group Economics, said that additional costs and expenses surveyed during the month, besides those surveyed on a monthly basis, included hospital fees, rugby tickets, doctor and dentist tariffs, medical aid contributions and soccer tickets.
These items, she said, carried large weights in the CPI basket and from that point of view posed a risk to the forecast.
"Consumers are still price sensitive and with the continued rise in fuel, a 28c fuel levy will be added in April 2012 to bring the petrol price to over R11.50 a litre, and food prices, consumers' discretionary buying power is hampered," she said.
Thabi Leoka, Standard Bank research strategist, said she expected CPI to remain unchanged at 6.3% y/y in February due to the upward pressure emanating from food and fuel prices.
She said that the bank adjusted its outlook and now expected CPI to peak at 6.4% y/y in the second quarter of 2012, slightly lower than the South African Reserve Bank forecast of 6.6%.
Some positive news for CPI going forward was the announcement by Eskom of an increase of 16% to be introduced from April, around nine percent less than last year's increase, Econometrix economists said.
This, they added, in turn implied that the y/y electricity inflation rate could be between 0.2% and 1.0% lower over the coming year.
Another development that could add to an improvement in prospects for inflation related to the food price front, where there had been signs of a tailing-off in the rising trend of maize and wheat prices, according to Econometrix.
"Even the proposed toll fees on Gauteng roads do not stand to raise inflation by more than 0.2%," they said.
Annual CPI registered 5.0% in 2011, from 4.3% in 2010 and 7.1% in 2009.
It was 11.5% in 2008.
The February CPI data will be released by Statistics SA at 10:00 on Thursday, March 22.
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