Photographer: Dean Hutton/Bloomberg

South Africa November Inflation Rate Rises to 9-Month High

  • Fuel prices set to keep inflation rate high: BNP Paribas
  • Price growth has been near or exceeded target through 2016

South African inflation accelerated to the highest level in nine months in November, boosted by increases in food and transport prices.

The inflation rate was 6.6 percent compared with 6.4 percent a month earlier, Pretoria-based Statistics South Africa said on its website Wednesday. The acceleration is in line with the 6.6 percent median estimate of 17 economists surveyed by Bloomberg. Prices climbed 0.3 percent in the month.

Prices of food and non-alcoholic beverages, which comprise 15.4 percent of the index, climbed 11.6 percent from a year earlier, while fuel costs rose 5.6 percent.

“We are still seeing sticky domestic food prices,” Jeffrey Schultz, an economist at BNP Paribas Securities in Johannesburg, said by phone on Wednesday.

Price growth has been near or exceeded the upper end of the central bank’s 3 percent to 6 percent target band since the start of the year as the worst drought in more than a century and a weaker currency put pressure on consumer prices. Inflation expectations have declined in the past month, leaving some room for the Reserve Bank to support an economy that will probably expand at 0.4 percent this year, the bank said Nov. 24.

The Reserve Bank last month left interest rates unchanged for a fourth straight meeting this year, even as it warned that risks to inflation may force it to reassess its call that the policy-tightening cycle is near an end. The bank said inflation will peak at an average of 6.6 percent in this quarter, then slow to 5.8 percent next year and 5.5 percent in 2018.

Core inflation, which excludes food, non-alcoholic beverages, gasoline and electricity costs, was 5.7 percent in November, matching the median estimate by 16 economists compiled by Bloomberg.

The rand was little changed at 13.6213 per dollar at 10:51 a.m. in Johannesburg on Wednesday. Yields on rand-denominated government bonds due Dec. 2026 rose 1 basis point to 8.94 percent.

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