South African Inflation Accelerates to Six-Month High

South African inflation accelerated to a six-month high of 3.7 percent in January as gasoline costs and food prices climbed, closing the door on further interest-rate cuts to spur the recovery in Africa’s biggest economy.

The inflation rate rose from 3.5 percent in December, the Pretoria-based statistics office said on its website today. That was in line with the median estimate of 20 economists surveyed by Bloomberg. Prices rose 0.4 percent in the month.

The government increased gasoline prices by 3.3 percent on Jan. 5 as crude oil prices surged, while the futures price of white corn, a staple in South Africa, climbed 35 percent in the past six months. Reserve Bank Governor Gill Marcus, who cut the benchmark interest rate three times to 5.5 percent last year, said on Feb. 4 that inflation may reach the upper end of the 3 percent to 6 percent target range sooner than expected if oil and food prices continue to increase.

“Food prices are starting to bite, and are likely to go one way only,” said Elna Moolman, an economist at Renaissance BJM, a Johannesburg-based stockbroker. “We are at the start of the pressure” on inflation. “While there’s no likelihood of further rate cuts, we think the Reserve Bank won’t hike rates until early 2012.”

The inflation rate has risen in three of the past four months, after declining in 24 of the previous 26.

Marcus left the key rate unchanged on Jan. 20 as rising oil prices pushed up the bank’s inflation forecast. The inflation rate will probably average 4.6 percent this year, she said at the time, compared with the previous estimate of 4.3 percent.

Food, Transport

Food prices, which account for about 14 percent of the consumer price index, rose an annual 3.1 percent in January from 1.5 percent in the previous month, the statistics office said. Transport costs climbed 2.5 percent from 1.6 percent.

The rand has reversed some of its 2010 gains, sliding 9.6 percent against the dollar since the beginning of January and adding to price pressures. The currency was at 7.3226 per dollar as of 10:29 a.m. in Johannesburg from 7.3376 before the data was released.

The Reserve Bank cut its key rate to a 30-year low last year to spur consumer spending and economic growth, which the bank expects to reach 3.4 percent this year. The bank probably won’t increase interest rates until it’s confident that growth will reach 4 percent on a sustainable basis, Moolman said.

To contact the reporter on this story: Nasreen Seria in Johannesburg at nseria@bloomberg.net.

To contact the editor responsible for this story: Philip Sanders at psanders@bloomberg.net.

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