South African inflation slowed to 6 percent in March as food prices eased, adding to expectations that the Reserve Bank will keep its benchmark interest rate unchanged.
The inflation rate fell from 6.1 percent in February, Pretoria-based Statistics South Africa said on its website today. That was in line with the median estimate of 18 economists surveyed by Bloomberg. Prices rose 1.1 percent in the month.
“The surprise to our forecast was the moderation in food inflation,” Gina Schoeman, an economist at Absa Group Ltd., said in a telephone interview from Johannesburg today. “This certainly is going to help the Reserve Bank feel more comfortable about current policy rates. We could see a rate hike a little later than expected.”
The central bank has kept the benchmark repurchase rate at 5.5 percent, the lowest level in more than three decades, since November 2010 to help support growth in Africa’s largest economy. Inflation, which exceeded the bank’s 3 percent to 6 percent target for four consecutive months until February, will probably peak at 6.5 percent in the second quarter, Governor Gill Marcus said on March 29.
Inflation eased last month as food prices rose at a slower pace of 8.9 percent from 10.1 percent in February, the statistics office said.
Consumer prices may pick up again after the government increased the cost of gasoline by 6.3 percent in April.
The rand fell to 7.8195 per dollar as of 11:22 a.m. in Johannesburg from 7.8091 before the data was released. The yield on the benchmark rand bond due in 2015 dropped five basis points, or 0.05 percentage point, to 6.46 percent.