South African inflation rose for the second month in a row in March to 7.1% year-on-year, driven by a steep increase in food prices, data showed on Wednesday.
Economists said the pick-up in inflation, from 7% in February, meant the Reserve Bank would probably raise interest rates again next month.
Wednesday’s reading was a surprise: analysts polled by Reuters had predicted a drop in March inflation to 6.9%.
Inflation for food and non-alcoholic beverages stood at 14% in March, the largest annual increase in 14 years.
The South African Reserve Bank (SARB) has hiked interest rates nine times in a row since November 2021 to try to tame inflation.
At its last meeting in March, the SARB — which targets inflation between 3% and 6% — surprised analysts with a larger-than-anticipated 50 basis point hike.
Wandile Sihlobo, chief economist at the Agricultural Business Chamber of South Africa, said he expected food price increases to remain elevated in the coming months, when they would likely peak.
First National Bank senior economist Koketso Mano said it appeared power constraints were worsening food inflation.
Core inflation, which excludes prices of food, non-alcoholic beverages, fuel and energy, was at 5.2% year-on-year in March, the same as in February, Stats SA figures showed.
Consumer inflation rose to 1.0% month-on-month in March from 0.7% in February.
Virág Fórizs, emerging markets economist at Capital Economics, said a 25 basis point hike at the SARB’s May 25 meeting now seemed probable.
Reuters
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