CPI nears MPC target

2011-10-20 00:00

THE key measure of consumer inflation, the Consumer Price Index (CPI) — which yesterday came in higher than expected at 5,7% for September from 5,3% in August 2011 — bears no threat of an imminent interest rate hike.

Instead, economists believe that the SA Reserve Bank’s monetary policy committee (MPC) will in the near term opt to focus on the vulnerable economic outlook as opposed to rising inflation.

CPI is now approaching the upper limit of the MPC’s three-to-six percent target range.

The main sectors contributing to the higher CPI were food and non-alcoholic beverages (8,5% in September from 7,3% in August), and housing.

CPI in Pietermaritzburg bucked the national trend, coming in at 5,3% from 5,6% in August 2011. However, the CPI for Durban was higher at 5,5% from five percent in August 2011. KZN’s CPI was also higher — at 5,4% from five percent.

It appears that higher food prices are now the norm across the country, as the CPI for food and non-alcoholic beverages in Pietermaritzburg accelerated to 7,5% last month from 6,8% in August 2011.

KZN’s CPI for food and non-alcoholic beverages was 7,7% in September from 6,8% in August 2011, while the Durban figure came in at 7,5% last month from 6,5% in August.

Nedbank economist Carmen Altenkirch said the bank is likely to maintain its “wait-and-see approach until the global and local economic environment becomes clearer”.

“We maintain our view of unchanged interest rates until the third quarter of 2012, but acknowledge that the possibility of a rate cut in the short term has increased.”

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