South Africa’s inflation rate rose to 6.1 percent in November, breaching the central bank’s target range for the first time in almost two years, as higher fuel prices and a weaker rand boosted costs.
Inflation in Africa’s biggest economy accelerated from 6 percent in November, the Pretoria-based statistics office said on its website today. Prices rose 0.3 percent in the month. The median estimate of 20 economists was for inflation to reach 6.2 percent. The central bank is mandated to keep inflation inside a band of 3 percent to 6 percent.
“We are seeing rising food prices, we are still seeing resilient grain prices and higher input costs,” said Gina Schoeman, an economist with Absa Bank Ltd. in Johannesburg, said in a telephone interview. “The bad news is that even though it peaks next year, the downward trajectory is quite sticky and slow.”
The Reserve Bank has kept its benchmark rate at a 30-year low for a year as it seeks to stave off the impact of a possible recession in Europe because of a deepening debt crisis. Europe buys about a third of South Africa’s manufactured exports. The rand’s 20 percent decline against the dollar this year has added to inflation, reducing room for the central bank to cut rates to boost growth.
Economic growth stalled at 1.4 percent in the third quarter, little changed from the almost two-year low of 1.3 percent in the previous three months.
The inflation rate will probably peak by March and remain outside the target range until the fourth quarter, Reserve Bank Governor Gill Marcus said on Nov. 10.
“The committee is concerned that the change in the profile of the inflation forecasts, and the extended breach of the upper end of the inflation target range, may impact adversely on inflation expectations,” she said.
Inflation is forecast to average 6.1 percent next year, according to a survey of analysts, business executives and labor unions conducted by the University of Stellenbosch. The survey had previously forecast price increases of 5.9 percent for 2012.
The rand weakened 0.3 percent to 8.3175 per U.S. dollar at 10:37 a.m. in Johannesburg. The currency was at 8.3546 before the data was released. The yield on the benchmark rand bond due in 2015 rose 7 basis points, or 0.07 percentage point, to 6.96 percent.
The government raised gasoline prices 2.2 percent in November as the rand weakened. Corn, a staple food in South Africa, jumped 4.9 percent in November.