South Africa's Inflation Rate Increases to 4.8% in November

  • Rand weakened to record low against dollar, euro, pound
  • Currency depreciation a major risk to inflation outlook

South Africa’s inflation rate rose to 4.8 percent in November, the highest since July.

Inflation accelerated from 4.7 percent in October, the Pretoria-based statistics office said on its website on Wednesday. The rate was in line with the median of 22 economist estimates compiled by Bloomberg. Prices rose 0.1 percent in the month.

South Africa’s economy narrowly avoided a second recession in six years in the third quarter and will probably expand at the slowest pace this year since 2009, complicating central bank Governor Lesetja Kganyago task to rein in price growth with monetary policy. The Reserve Bank has taken a gradual approach to raising interest rates, increasing the benchmark repurchase rate 1.25 percentage points to 6.25 percent over the past two years.

“The Reserve Bank will try to stay one step ahead of the curve,” Bart Stemmet, an economist at NKC African Economics, said by phone from Paarl on Wednesday. “Even though the inflation rate is rising very slowly, all the risks to inflation are to the upside.

The rand’s slump to a record low against the dollar on Tuesday may stoke inflation, which the central bank forecasts will breach the 3 percent to 6 percent target band in the first and fourth quarters of next year. The depreciation of the currency represents a risk for price growth, the Reserve Bank said in a report on Tuesday.

The rand weakened 0.1 percent to 14.6073 per dollar as of 11:10 a.m. in Johannesburg on Wednesday, taking its decline this year to 21 percent. Yields on rand-denominated government bonds due December 2026 fell two basis points to 8.80 percent.

Core inflation, which excludes food, non-alcoholic beverages, gasoline and electricity costs, slowed to 5.1 percent in November, the lowest rate of increase in prices since August 2013.

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