November CPI unchanged at 5.6%, as expected
SOUTH Africa’s November consumer price index (CPI), which the Reserve Bank uses for inflation targeting, came in unchanged from October, as expected‚ increasing 5.6% year on year‚ Statistics South Africa said on Wednesday.
In a survey of leading economists, forecasts ranged from 5.4% to 5.9%.
CPI increased 0.2% month on month in November, slowing from 0.6% in October.
"The rise in the CPI on the month was due to price pressure coming from the food and nonalcoholic beverages component as higher grain prices at the agricultural level fed through into higher bread and cereal prices, while meat prices also experienced upward pressure due to higher feed prices," Investec chief economist Annabel Bishop said on Wednesday.
While the food and nonalcoholic beverages sector showed the highest inflation, at 7% year on year, the biggest contributor to the overall increase was housing and utilities, adding 1.4 percentage points against 1.1 percentage points for food and nonalcoholic beverages.
The food and nonalcoholic beverages index increased 1.2% on the month in November, and the 7% year-on-year increase marked an acceleration from 6.3% in October 2012.
Fruit increased 3.7%; vegetables 3.2%; meat 1.1%; other food 1.1%; cold beverages 1.1%; bread and cereals 1%; fish 0.9%; oils and fats 0.8%; sugar, sweets and desserts 0.6%; and milk, eggs and cheese 0.2%. The hot beverages component decreased 0.4%.
The increase in food inflation did not come as a surprise. Nedbank economist Busisiwe Radebe said: "The 5.6% (overall) figure is in line with what the market expected with the biggest contributors to the figure being housing and utilities followed by and food and non-alcoholic beverages. We expected food would take a bite and that it would be an issue."
Grain prices rose this year as a severe and protracted drought hit the US Midwest.
Some relief was to be found in the transport index, which fell by 0.2% on the month in November, mainly due to a fall of 10c a litre in the price of petrol. The annual rate fell to 5.5% in November 2012 from 6.1% in October 2012.
The North West had the highest year-on-year inflation rate among the provinces, at 6.6%, with Mpumalanga (6.2%), Limpopo (6.1%) and the Northern Cape (6%) all touching or breaching the 6% upper limit of the Reserve Bank’s 3%-6% inflation target range. KwaZulu-Natal was just within it, at 5.9%.
The Western Cape’s 5.4% was the lowest. Gauteng and the Free State came in just below the national rate at 5.5%, with the Eastern Cape at 5.6%.
The provinces with an annual inflation rate lower than or equal to headline inflation were the Eastern Cape (5.6%), Free State (5.5%), Gauteng (5.5%) and the Western Cape (5.4%).
"(CPI) is in line with market expectation," said KADD Capital economist Elize Kruger. "This print will have neutral impact on the (Bank’s) outlook. Our view is that interest rates will remain flat through 2013."
Ms Bishop said: "We continue to believe that the Reserve Bank will leave interest rates unchanged until November next year, when a 50 basis point hike could become possible as growth strengthens and monetary policy begins normalising.
"CPI inflation is likely to exceed the target in early 2013, given the impact of the re-weighting exercise, but then fall back into the 3%-6% target range later in the year."
The household contents and services index was unchanged between October and November, but the annual rate increased to 3.1% in November 2012 from 2.8% in October 2012.
The miscellaneous goods and services index was unchanged between October 2012 and November 2012. The annual rate increased to 5.4% in November 2012 from 5.3% in October 2012.
The annual average consumer inflation rate was 5% in 2011 from 4.3% in 2010.
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