Pretoria - The Consumer Price Index (CPI) rose to 3.4 percent in October, beating market expectations, said Statistics South Africa (Stats SA).
"The headline CPI annual inflation rate in October 2010 was 3.4 percent. This rate was 0.2 of a percentage point higher than the corresponding annual rate of 3.2 percent in September 2010," Stats SA said on Wednesday.
Between September and October this year, the food and non-alcoholic beverages index increased, driven by spikes in oils and fats, bread and cereals, meat and cold beverages. However, these were counteracted by monthly decreases in fruit, vegetables and hot beverages among other things.
The transport index increased between the two months due to an increase in the price of new vehicles and petrol.
"The data came out slightly above market expectations. Moderating services inflation and lower import costs continued to contain inflation," said Nebank, adding that the short term outlook for inflation remained favourable, supported by the strength of the rand and price sensitive consumers.
Nedbank said the risks emanated from above inflation wage and administered price increases, as well as upward pressure on international agricultural prices.
"The [Monetary Policy Committee] is expected to keep interest rates on hold throughout 2011 as the local recovery remains relatively modest and inflation slowly starts to creep higher, although still subdued and well within the target band.
"In the short-term, the risk to the interest rate forecast remains on the downside. Further monetary easing is still possible if the rand remains strong, economic growth disappoints again and inflation remains," said Nedbank.
Standard Bank senior economist, Johan Botha, said the figure was slightly higher than what they predicted.
"Our expectation was that it would come in at 3.3 percent so it is no big surprise ... However, there is a bit of concern around administered prices, like healthcare and education, that are all increasing above the upper limit of target," said Botha.
