CPI fore­cast at 5.4 per­cent for May

The Star Early Edition - - NEWS - Siseko Njobeni

THE South African head­line con­sumer price in­dex (CPI) is fore­cast at 5.4 per­cent year-onyear in May, slightly higher than the 5.3 per­cent in April, ac­cord­ing to sev­eral South African econ­o­mists.

CPI slowed more than ex­pected to 5.3 per­cent in April from 6.1 per­cent in March. But the South African Re­serve Bank soon dashed any hopes the drop in in­fla­tion would trig­ger a rates cut. Gov­er­nor, Le­setja Kganyago said last month, de­spite CPI fall­ing within the Bank’s tar­get of be­tween 3 per­cent and 6 per­cent, the longer term CPI tra­jec­tory was “un­com­fort­ably” close to the up­per end of the tar­get range.

In a note on Thurs­day, NKC African Eco­nom­ics se­nior econ­o­mist El­ize Kruger said a mar­ginal in­crease in food prices as well as in­creases in petrol and diesel prices were ex­pected to ex­ert a mod­er­ate up­ward pres­sure on in­fla­tion, hence the fore­casted 5.4 per­cent fig­ure.

Kruger said, ex­clud­ing food and non-al­co­holic bev­er­ages, in­fla­tion was fore­cast to in­crease to 5.3 per­cent in May. She said CPI be­low 6 per­cent would pro­vide com­fort to the Re­serve Bank that in­fla­tion was in­deed be­hav­ing in line with ex­pec­ta­tions.

In a note on this week’s ma­jor eco­nomic data, In­vestec econ­o­mist Kamilla Ka­plan also fore­cast a 5.4 per­cent CPI in­fla­tion in May.

“In May, the petrol and diesel price hikes of 49c/litre and 30c/ litre will have in­creased the con­tri­bu­tion of the fuel com­po­nent to head­line CPI.”

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