South African Inflation Rate Declines to 6% in SeptemberFranz Wild
South Africa’s inflation rate fell to within the central bank’s target range from a four-year high as lower fuel prices eased transport costs in September.
Inflation decelerated to 6 percent from 6.4 percent in August, the Pretoria-based statistics office said on its website today. The gauge was in line with the median estimate of 26 economists in a Bloomberg survey. Consumer prices increased 0.5 percent in the month.
Gasoline “did all the work,” Ilke van Zyl, an economist at Vunani Securities Ltd. in Johannesburg, said by phone. “It’s taking temporary pressure off inflation worries.”
Policy makers are trying to balance risks from price pressures following a 14 percent drop in the value of the rand against the dollar this year with forecasts of the slowest economic growth since a recession in 2009. The central bank has kept the benchmark interest rate at a 30-year low of 5 percent since July 2012. Inflation breached the bank’s 3 percent to 6 percent target in July for the first time in 15 months. Price growth probably peaked in the third quarter, according to the Reserve Bank.
Gasoline inflation slowed to 12.8 percent in September from 22.3 percent in the previous month.
The inflation data is “definitely rates-neutral,” Van Zyl said. “The exchange-rate weakness is still ongoing.”
The rand is the worst performer against the dollar this year among 16 major currencies tracked by Bloomberg, declining 14 percent. It fell 0.6 percent to 9.7957 per dollar by 11:10 a.m. in Johannesburg. South African forward-rate agreements starting in 12 months, used to lock in borrowing costs, dropped two basis points, or 0.02 percentage point, to 5.78 percent, the lowest levels since June 4.