South Africa’s inflation rate rose for a second month to 5.8 percent in January as the rand’s slump against the dollar boosted food and fuel costs.
Inflation accelerated from 5.4 percent in December, the Pretoria-based statistics office said. The median estimate of 24 economists surveyed by Bloomberg was 5.7 percent. Prices rose 0.7 percent in the month.
The rand’s 23 percent plunge against the dollar since the start of last year, the worst performance among 16 major currencies tracked by Bloomberg, has boosted inflation expectations as import costs increase. That prompted the Reserve Bank to raise its benchmark repurchase rate by half a percentage point to 5.5 percent last month, the first increase since June 2008.
“We are starting to see broader price pressure in food,” Kevin Lings, an economist at Stanlib Asset Management in Johannesburg, said by phone today. “The Reserve Bank won’t be too anxious about this number, but they’ll be watching for the next couple of months to see if core inflation becomes a problem.”
Food prices, which account for 14 percent of the inflation basket, rose 4.3 percent in January from a year ago, up from 3.5 percent in December, Statistics South Africa said. They climbed 1.6 percent in the month.
The core inflation rate, which excludes food, non-alcoholic beverages, gasoline and energy costs, was unchanged at 5.3 percent in January, in line with the median estimate of eight economists surveyed by Bloomberg.
Inflation will probably breach the central bank’s 3 percent to 6 percent target in the second quarter of this year and peak at 6.6 percent in the final three months of the year, Governor Gill Marcus said on Jan. 29.
The rand lost 0.6 percent against the dollar and traded at 10.9378 as of 11:06 a.m. in Johannesburg.