CPI rises more than expected

2011-06-23 00:00

THE consumer price index (CPI) rose significantly higher than market expectations, to 4,6% in May.

However, the data failed to convince analysts that the Reserve Bank will hike the interest, or repo, rate in 2011.

Consumer inflation last month was fuelled by rising food and fuel costs, as well as rising household costs and related services.

The CPI in April 2011 was 4,2% and the market expected the figure to come in at 4,3% in May 2011.

Despite the higher-than-expected CPI, economists expect the first rate hike to occur in early 2012 rather than in the last quarter of 2011.

The CPI in Pietermaritzburg was relatively stable in May, at 5,2% from 5,3% in April.

CPI in KwaZulu-Natal in May was higher at four percent compared with 3,6% in April, while Durban’s CPI also came higher at 3,6% last month from 3,2% in April.

Administered prices remained the main driver of the acceleration in the CPI. The trend of administered prices overshooting the overall CPI has continued unabated for 18 consecutive months. Administered prices are those of goods and services provided by entities owned by the government, such as electricity tariffs.

The CPI for food and non-alcoholic beverages in Pietermaritzburg was 6,1% in May, up from 5,9% in April.

The CPI for food and non-alcoholic beverages in KZN in May shot up to 5,8% from 4,8% in April 2011.

The CPI for food and non-alcoholic beverages in Durban was 6,3% last month from five percent in April 2011.

Standard Bank economist Shireen Darmalingam noted that the price of many categories of food — including alcoholic beverages, vegetables, oils and fats, bread and cereals, hot and cold beverages, sugar, sweets and desserts — rose relatively significantly last month in relation to the price levels experienced a year earlier.

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