Expect prices to rise

2012-12-13 00:00

THE impact of a recent drought in the United States and festive season price hikes will be felt by consumers during the holidays, judging by the comments of economists following the release of the latest Consumer Price Index (CPI) yesterday.

The November 2012 CPI was unchanged at 5,6%.

Economists warned that rising food prices would put short-term upward pressure on the CPI in December 2012, before easing in 2013. The CPI is expected to remain within the South African Reserve Bank’s target range of 3-6% for the next six months or so.

The drivers of the latest CPI were food and non-alcoholic beverages, as well as housing and utilities.

The CPI for administered prices remained above the CPI rate, coming in at 8,7% year-on-year.

KZN’s inflation rate was unchanged at 5,9% in November 2012. The CPI in Durban was 5,3% last month compared with 5,4% in October 2012. Pietermaritzburg’s CPI came in at 5,8% in November from 6,1% in October.

Food and non-alcoholic beverage inflation in KZN in November was higher at 7,5% from seven percent in October. Food and non-alcoholic beverage inflation in Durban was 7,7% last month from 6,7% in October. Food and non-alcoholic beverage inflation in Pietermaritzburg was 7,1% in November from 7,3% in October.

Nedbank economist Busisiwe Radebe said food price hikes were inevitable following the drought in the U.S., as well as seasonal increases associated with the festive season.

Radebe said the rand could play a vital role in the movement of the CPI in 2013. “Barring any major depreciation, inflation should remain close to the upper end of the target range. The focus will therefore be on the economic outlook. Much will depend on whether the US ‘fiscal cliff’ can be averted and on developments in Europe.”

Standard Bank economist Shireen Darmalingam said: “We believe the {Reserve] Bank will retain its pro-growth bias, and expect it to cut rates in quarter two of 2013. However, the wide current account, increasing inflation and slow growth may see the SARB delay such a rate cut.”

 

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