(Bloomberg) -- South African inflation unexpectedly accelerated in October to the highest rate in seven months, driven by food, non-alcoholic beverages, housing and utilities.
Consumer prices rose 3.3% from a year earlier, compared with 3% in September, Pretoria-based Statistics South Africa said Wednesday in a statement on its website. The median estimate of 15 economists in a Bloomberg survey was 3%. Prices rose 0.3% in the month, compared with median estimate of no growth, according to eight economists in a separate survey.
Key Insights
- Despite the uptick, the rate remains close to the floor of the central bank's target band of 3% to 6%. The Reserve Bank's benchmark interest rate is at the lowest level since it was introduced in 1998, after the monetary policy committee eased by a total of 300 basis points this year, with inflation that even dipped below the target range for two months. The panel sees price growth remaining at or below the middle of the band at least until the end of 2022.
- While the central bank held its key rate for a second straight meeting last week and signaled increases next year, it hasn't “closed the door” on easing due to uncertainties over the outlook for economic growth and inflation, Deputy Governor Fundi Tshazibana said.
- The implied policy rate path of the central bank's quarterly projection model indicates two increases of 25 basis points each in the third and fourth quarters of 2021, however, future decisions will be data-dependent. The bank sees Africa's most-industrialized economy shrinking by 8% in 2020, before expanding by 3.5% next year.
- Core inflation, which excludes the prices of food, non-alcoholic drinks, fuel and electricity, also quickened more than projected, to 3.4% from 3.3% in September.
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