S.Africa Feb CPIX slows to 4.9 pct yr/yr

(Reuters) - South Africa's targeted CPIX inflation rate rose by 4.9 percent in the year to February, below forecasts, after increasing by 5.3 percent in January, official data showed on Wednesday.

Figures from Statistics South Africa also indicated that the all-items consumer price index (CPI) increased by an annual rate of 5.7 percent in February compared to January's 6.0 percent.


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Consumers urged to cut debt

South Africa's central bank is willing to raise interest rates further if the inflation outlook worsens, the bank's governor Tito Mboweni said on Thursday, urging consumers to cut debt.

But he offered a reprieve to commercial banks, saying the Reserve Bank would hold off on raising reserve requirements to give them more time to curb high lending.

The Reserve Bank last month kept its key repo rate unchanged at 9% after increasing rates by 200 basis points between June and December last year, citing a peak in CPIX inflation within the country's 3%-6% inflation target.

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SA facing new rate threat

Rising maize and wheat prices are reducing the chances that South Africa's main inflation rate will slow in line with central bank forecasts, increasing the risk of another interest rate hike.

South Africa's central bank last year raised interest rates by a cumulative 200 basis points as it battled to keep inflation within its target band of 3-6%.

The Reserve Bank halted its tightening cycle in mid-February on an improved inflation outlook and predicted that CPIX inflation - targeted for monetary policy - will peak at 5.6% in the second quarter before easing to average 4.7% in 2008.

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Oil, maize price risks to S.Africa inflation - survey

South Africa's inflation prospects have improved this year, but higher international oil and maize prices could cloud the outlook, the Bureau of Economic Research (BER) said on Wednesday.

In its quarterly economic survey, the BER said inflation was unlikely to breach the upper end of the central bank's 3-6 percent target range and forecast an average CPIX increase of 5.4 percent this year, up from 4.6 percent in 2006.

International oil prices have pushed higher over the past few weeks to more than $60 a barrel after briefly dipping below $50 a barrel, raising the prospect of higher domestic fuel prices adding to inflationary pressures.

Maize prices have surged to four-year highs and are up by 30 percent since the beginning of the year, the BER said in a statement.

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Inflation 'still in check'

The inflation rate targeted by South Africa's central bank quickened in January, official data showed on Wednesday, keeping open the possibility of another rate hike.

Statistics South Africa said the CPIX inflation rate rose by 5.3% in the year to January, slightly above forecasts of 5.2%, after 5.0% in December.

The Reserve Bank kept its key repo rate steady at 9% last week after 200 basis points worth of hikes last year, saying the inflation outlook had improved.

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Inflation forecast up at 5.2%

Consumer inflation excluding interest on mortgage bonds (CPIX) - the measure used by the South African Reserve Bank (SARB) for its inflation target - is expected to increase to 5.2% in January from December's 5.0%, an I-Net Bridge survey has found.

Three economists expected CPIX to break below 5.0%, while nine of the 14 economists surveyed expected an increase above 5.0%. Forecasts ranged from 4.9% y/y to 5.3% y/y. CPIX was at 4.3% a year ago.

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Easing inflation pressures fuel hopes that Bank may take breather on interest rate increases

PRICE pressures continued to moderate last month, fuelling expectations that rate hikes could be at their peak. SA’s inflation numbers, which came out last week, show that consumer inflation numbers came in better than expected, while producer inflation data were also a pleasant surprise.

CPIX inflation (the consumer price index excluding mortgage costs) came in at 5% year on year last month, unchanged from the previous two months, while PPI (the producer price index) was at 9,3% (10%) year on year.

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Inflation steady at 5%

The increase in South Africa's consumer price index excluding mortgage rate changes (CPIX) for metro and other areas, which is used by the South African Reserve Bank (SARB) for its inflation target, was up 5.0% year-on-year (y/y) in December, unchanged from November, Statistics South Africa (Stats SA) said on Wednesday.

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