Statistics South Africa said today that the headline annual inflation rate in September 2017 was 5.1%.
This rate was 0.3 of a percentage point higher than the corresponding annual rate of 4.8% in August.
Stats SA said on average, prices increased by 0.5% between August and September.
FNB said the September CPI was in line with expectations.
Senior economic analyst, Jason Muscat, said that jump above 5% was largely anticipated by the market given the 67c a litre increase in the fuel price last month.
He said food and non-alcoholic beverage inflation moderated to 5.4% y/y, with bread and cereal prices contracting -2.8%. Meat prices, which rose 15.6%, continue to climb, and the outbreak of avian flu could push out the peak by a few months.
“Housing and utilities inflation expanded 4.9% y/y from 4.5% in August, with both actual rental prices increasing 5.7%. We expect the above 5% print to be temporary owing to base effects, and expect October CPI to dip just below the 5% level,” Muscat said.
“Overall, weak economic growth, low consumer and business confidence and stretched consumers means there is simply not enough demand to spur inflation higher,” he added.
“Despite core inflation remaining benign at 4.6% y/y, we think the scope for further rate cuts is diminishing, and expect the Reserve Bank to keep rates unchanged at the November MPC,” said Muscat.
“We think it is likely that the bank will wait to let much of the event risk (MTBPS, rating agency assessments, Eskom tariff application, ANC November elective conference) play out before moving on rates, rather than lowering in November only have to reverse the cuts should event outcomes stoke fears of higher inflation,” he said.
