off-the-wire

UPDATE 2-South Africa inflation rises for second month, driven by food prices

Kitco Media
By Reuters
Published:
Updated:
Reuters
(Adds details, background) By Kopano Gumbi and Tannur Anders JOHANNESBURG, April 19 (Reuters) - South African inflation rose for the second month in a row in March to 7.1% year on year, driven by a steep increase in food prices, data showed on Wednesday. Economists said the pickup in inflation, from 7.0% in February, meant the central bank would probably raise interest rates again next month. Wednesday's reading was a surprise: analysts polled by Reuters had predicted a drop in March inflation to 6.9%. Inflation for food and non-alcoholic beverages stood at 14.0% in March, the largest annual increase in 14 years. The South African Reserve Bank (SARB) has hiked interest rates nine times in a row since November 2021 to try to tame inflation.


At its last meeting in March, the SARB -- which targets inflation between 3% and 6% -- surprised analysts with a larger-than-anticipated 50 basis point hike. Wandile Sihlobo, chief economist at the Agricultural Business Chamber of South Africa, said in a research note that he expected food price increases to remain elevated in the coming months, when they would likely peak. First National Bank senior economist Koketso Mano said it appeared that power constraints were exacerbating local food inflation. Core inflation, which excludes prices of food, non-alcoholic beverages, fuel and energy, was at 5.2% year-on-year in March, the same as in February, Statistics South Africa figures showed. Consumer inflation rose to 1.0% month on month in March from 0.7% in February.


Virág Fórizs, emerging markets economist at Capital Economics, said in a note that a 25 basis point hike at the SARB's May 25 meeting now seemed probable. (Editing by Alexander Winning and Raissa Kasolowsky)

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.