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CPI unchanged at 5.6%

The Consumer Price Index (CPI) remained unchanged at 5.6% in November, Statistics South Africa (Stats SA) said on Wednesday, 12 Decemeber 2012.
"Headline CPI (for all urban areas) annual inflation rate in November 2012 was 5.6%. This rate was unchanged from the corresponding annual rate of 5.6% in October 2012," said Stats SA.

Market expectation was that it would remain unchanged at 5.6%.

According to Stats SA, CPI increased by 0.2% month-on-month in November from 0.6% in October.

The food and non-alcoholic beverages index continued to increase in November, rising to 7% from 6.3% in October. The increase was driven by higher prices of fruit, vegetables, meat, bread and cereals as well as other food among others.

Standard Bank said it expected a further acceleration in food inflation.

Nedbank economists agreed with this, saying the increase in food prices were a result of the dry US summer.

"This, together with the usual seasonal increase in the price of foodstuff such as meat, will ensure that food remains a risk in the December CPI number. Despite this, we still expect inflation to remain within the target range in the short term," said Nedbank.

The transport index decreased to 5.5% year-on-year from 6.1% in October. Petrol prices in November declined by 10 cents a litre.

The bank said it expected CPI inflation to overshoot the Reserve Bank's upper target band of 6% by mid-2013.

"We expect that the annual average will be between 5.5% and 6 % over 2013. This is before taking into account the impact of the new inflation basket on the number for January 2013 onwards, which could push CPI up by a few percentage points," said Standard Bank.

Most of 2013, said Nedbank, would depend on developments in Europe and on whether the US "fiscal cliff" could be averted.

"Clearly a renewed slump globally would increase the possibility of further interest rate cuts domestically. However, with rising inflationary pressures and a vulnerable balance of payments, the MPC [Monetary Policy Committee] will probably keep rates on hold provided there is no threat of recession," said Nedbank.

SOURCE is a South African government news service, published by the Government Communication and Information System (GCIS). (formerly BuaNews) was established to provide quick and easy access to articles and feature stories aimed at keeping the public informed about the implementation of government mandates.
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