Ntsakisi Maswanganyi
CONSUMER inflation‚ as measured by the consumer price index (CPI)‚ quickened more than expected last month‚ dashing any hope for further interest rate cuts.
The CPI rose to 5.9% last month compared with the a year earlier‚ from 5.4% year on year in January. The 5.9% was much higher than the 5.7% year-on-year consensus forecast by BDlive.
The Reserve Bank targets inflation within a band of 3% to 6%.
"We have for a long time been arguing that upside inflation risks will prevent the Reserve Bank from cutting interest rates again in this cycle‚ which is supported by today’s data‚” Renaissance Capital economist Elna Moolman said.
Inflation rose by 1% on the month from a 0.3% month-on-month increase in January.
"It was clearly an upside surprise. Upward pressure came from survey items including health insurance‚ and there was some evidence of exchange rate pass-through‚” Rand Merchant Bank (RMB) global markets senior economist Carmen Nel said.
The upward pressure in prices was led by increases in the transport index‚ which rose mainly due to a 41c/l increase in the petrol price. Petrol has a higher weighting in the CPI basket that became effective in January.
A 9.9% increase in health insurance saw the miscellaneous goods and services index rise by 5.4% between January and February‚ adding significant upward pressure.
Restaurants and hotels also added upward pressure‚ increasing by 0.3% between January and February‚ while the food and nonalcoholic beverages index fell during the month‚ offsetting some of the upward pressure on inflation. © BDlive 2013
