CPI up, rates to tread water

2012-01-19 00:00

THE Reserve Bank is likely to keep interest rates unchanged at its Monetary Policy Committee (MPC) meeting today — judging by the latest Consumer Price Index (CPI), which has been registered as unchanged from the previous month at 6,1% in December 2011.

Consumer inflation, which was expected to rise in December 2011, surprised on the downside last month.

Statistics South Africa said that higher food and transport inflation continued to weigh heavily on the purchasing power of consumers after the festive season.

Nedbank economist Nicky Weimar said that although inflation will remain above the six percent mark in the early part of 2012, the Reserve Bank will be more sensitive toward the vulnerability of fragile economic growth, fixed investment and job security prospects.

However, she warned that higher prices of fuel, food and a weaker rand could upset the fine balance between inflation and interest rates.

The CPI in Pietermaritzburg was lower last month at 6,2% from 6,3% in November 2011.

However, The CPI in KZN rose from 6,1% in November 2011 to 6,6% in December 2011 — fuelled by a rise in food and non-alcoholic beverage inflation from 10% in November 2011 to 11,2% in December 2011.

Durban’s CPI was 6,5% last month from 6,4% during the previous month.

Food and non-alcoholic beverage inflation remained unchanged in Pietermaritzburg, at 10,8%, while the figure in Durban was 11,8% last month from 10,7% in November 2011.

Standard Bank economist Shireen Darmalingam noted that the average CPI for 2011 was five percent, compared with 4,3%. The Reserve Bank’s target range is 3-6%.

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