Pretoria – Inflation in South Africa is set to remain outside government’s 3-6% target range at 6.4% for 2016, according to National Treasury in its Medium Term Budget Policy Statement (MTBPS).
Treasury further said that “inflation is expected to remain close to 6% annually over the medium term, with upward pressure from electricity prices”.
South Africa’s current inflation rate of 6.4% is mainly as a result of higher petrol and food prices.
“The inflation forecast has been revised down to 6.4% for 2016 due to lower-than-expected electricity and import-price inflation. A further decline to 6.1% is expected in 2017,” said Treasury.
“Electricity price increases are forecast to average 9.1% per year over the period, with food inflation stabilising at 5.4% in the outer years.
“Rising unit labour costs, higher import-price inflation and inflation expectations are upside risks to the forecast,” said Treasury.