March 20 (Bloomberg) -- South Africa’s inflation rate rose to a 10-month high in February, pushed up by higher medical insurance costs.
Inflation accelerated to 5.9 percent from 5.4 percent in January, Pretoria-based Statistics South Africa said on its website today. The median estimate in a Bloomberg survey of 19 economists was 5.6 percent. Prices rose 1 percent in the month.
The rise “was mainly due to medical aid premiums that were surveyed during the month,” Ilke van Zyl, an economist at Vunani Securities (Pty) Ltd., said by phone from Johannesburg. The premiums “didn’t increase by a lot more than usual, but the weighting increased quite a bit.”
The statistics agency adjusted the consumer-price basket with effect from January to give more weighting to medical insurance, electricity and gasoline prices.
Inflationary pressures will probably increase due to a fall in the value of the rand. The currency is the worst performer this year of 25 emerging-market currencies tracked by Bloomberg, having weakened 8.4 percent against the dollar. This helped push gasoline prices up 12 percent from a year earlier in February. The central bank’s inflation target is 3 percent to 6 percent.
The rand traded 0.1 percent weaker at 9.2556 per dollar as of 11:20 a.m. in Johannesburg.
Yields on 13.5 percent bonds due March 2015 climbed four basis points, or 0.04 percentage point, to 5.48 percent. Yields on two-year interest-rate swaps, used to lock in borrowing costs, rose as much as seven basis points to 5.36 percent, the highest since July.
Reserve Bank Governor Gill Marcus will keep the repurchase rate at 5 percent later today, according to all 19 economists surveyed by Bloomberg.
“The outlook for inflation has deteriorated considerably mainly on the back of the weaker currency,” economists at Nedbank Group Ltd., South Africa’s fourth-largest bank, said today in e-mailed comments.
The Reserve Bank “will need to strike a balance between rising inflation as evidenced in the February consumer price inflation numbers and still poor economic growth outcomes,” they said. “We believe that a neutral policy stance will best balance weak growth and rising inflation. Rates will remain at current levels for most of the year.”
To contact the editor responsible for this story: Nasreen Seria at firstname.lastname@example.org