CPI reaches 6% in October

"This rate was 0.3 of a percentage point higher than the corresponding annual rate of 5.7% in September 2011. On average, prices increased by 0.5% between September 2011 and October 2011," said Stats SA on Wednesday, 23 November.

The Reserve Bank targets inflation between 3 and 6%.

Consensus was that CPI would reach 5.9% in October, with Standard Bank today expecting year-on-year growth to exceed 6% before year end, aggravated by the rand depreciating.

In October, the food and non-alcoholic beverages index increased by 2.1% between September and October 2011. The annual rate increased to 10.6% in October 2011 from 8.5% in September 2011.

The transport index increased by 0.9% between September 2011 and October 2011 mainly due to a 36c/litre increase in the petrol price.

Nedbank economist Carmen Altenkirch said higher food as well as administered prices will remain the drivers of inflation.

"Inflation's steady rise to 6% will not cause the Reserve Bank undue concern in the short term. However, the bank will watch for signs that it is feeding through into higher wage demands and into more generalised inflationary pressures.

"In the short term, the bank will continue to focus on how Europe's debt crisis unfolds and what implications this may have for both inflation and growth," said Nedbank.

The central bank kept the repo rate unchanged at 5.5% at its last Monetary Policy Committee meeting in November.

"We maintain our view of unchanged interest rates until the third quarter of 2012, but acknowledge that the possibility of a rate cut in the short term has increased," said Nedbank.