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Inflation rises to 4.1% in South Africa

Published on 20/04/2011

Inflation rose to 4.1 percent in South Africa in March from 3.7 percent in February, driven up by higher food and energy costs, the national statistics agency said Wednesday.

The figure remains well within the government’s target range of three to six percent but is expected to keep rising due to big hikes in electricity tariffs and rising fuel costs.

National power utility Eskom is raising electricity prices by 25 percent a year through 2012, part of its effort to finance a much-needed expansion.

Electricity and fuel costs were up 18.8 percent, while petrol costs rose 16.9 percent in March.

Food and non-alcoholic drinks cost 4.1 percent more, with meats, fruits and oils responsible for much of the gain.

The March figure was slightly higher than expected, said Kgotso Radira, Investec Group economist.

“CPI inflation has been below the mid-point of the inflation target band (4.5 percent) for ten months but is expected to reach it shortly,” he said in a statement.

“March’s inflation outcome is in line with our view that inflation should rise steadily this year, reaching six percent by year-end and exceeding the upper limit of the inflation target band in the fourth quarter of 2012.”

South Africa’s benchmark interest rate is currently 5.5 percent, a 30-year low, but monetary policy makers are widely expected to begin raising rates later this year.