Feb. 20 (Bloomberg) -- South African inflation slowed to a five-month low in January after the statistics office adjusted the consumer price basket and food and fuel prices eased.
The inflation rate fell to 5.4 percent from 5.7 percent in December, Pretoria-based Statistics South Africa said on its website today. The median estimate in a Bloomberg survey of 19 economists was 5.7 percent. Prices rose 0.3 percent in the month.
The government cut the price of gasoline by 1.2 percent in January as a stronger rand in the previous month helped to curb import costs. Since then, the currency has plunged 4.8 percent against the dollar and fuel prices climbed, adding to pressure on inflation.
“All indications are that this is not going to last and the overall trajectory is still upward,” George Glynos, an economist at Econometrix Treasury Management, said in a phone interview from Johannesburg.
The rand strengthened after the release of the data, advancing 0.2 percent to 8.8371 against the dollar by 11:11 a.m. in Johannesburg. Investors pared back expectations of higher interest rates, with the yield on forward-rate agreements due as soon as six months dropping 5 basis points to 5.03 percent.
The Reserve Bank has held its benchmark repurchase rate at 5 percent since a surprise cut in July. The bank’s mandate is to keep inflation within a range of 3 percent to 6 percent.
“This should have no implication for the repo rate, given this is expected to be a temporary slowdown,” Carmen Nel, an economist at Rand Merchant Bank, said in a phone interview from Cape Town.
Annual food inflation slowed to 6.2 percent in January from 6.9 percent the month before, while transport costs eased to 5.1 percent from 5.5 percent, the statistics agency said.
The statistics agency adjusted the consumer price basket with effect from January to give more weighting to electricity and gasoline prices.
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