South Africa’s targeted inflation - the Consumer Price Index excluding interest rates on mortgage bonds (CPIX) has risen to a new five-year high of 11.6% year on year in June from 10.9% year on year in May, Statistics South Africa said today (30 July). The surge is attributed to rising international oil prices and soring food costs. The higher than expected figure could put pressure on the Reserve Bank to raise interest rates yet again next month. This is the fifteenth month running that CPIX has been above the 6% upper target limit set by the Central Bank.

It had been widely expected that CPIX would come in at about 11.4% but most analysts have been surprised that it has come in higher than they had thought. There is still an ongoing debate with regards to the accuracy of the inflation figures being released. Some people are saying that we should wait for the new weightings to be in place so we can get a better reflection of the actual rate of inflation when calculations take place. And the immediate future is not looking too great with analysts predicting that the rate of inflation in South Africa will continue to rise over the next couple of months.

An economist has said, “The last time it (inflation) was this high was September 2002 when it was 11.6% following the rand’s dramatic collapse in 2001. The good news is that inflation is probably reaching its peak, with both international oil and food prices falling over the past week or two.”

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