Pretoria - The Consumer Price Index (CPI) in January slowed to 5.4% year-on-year from 5.7% in December, said Statistics South Africa (Stats SA) on Wednesday.
Market expectation was that CPI would come in at 5.7%.
On average, prices increased by 0.3% between December 2012 and January 2013, said Stats SA.
The food and non-alcoholic beverages index increased by 0.9% between December 2012 and January 2013.
The transport index decreased by 0.2% between December 2012 and January 2013, mainly due to a 13 cents a litre decrease in the price of petrol.
Nedbank economists said the 0.3% month-on-month increase was as a result of increases in the prices of food and non-alcoholic beverages, miscellaneous goods and services as well as the residual item, which all contributed 0.1% point each.
Stats SA has changed the weightings in its consumer price index basket to give a larger weight to electricity prices and petrol prices.
The bank said that despite the lower-than-expected CPI number in January, inflation was still likely to breach the 6% upper target for a few months in the second half of the year, pressured by a weaker rand and increases in administrative prices.
“While the January number is relatively positive, there is little chance of further relaxation in monetary policy this year.
“We believe that rates will remain at current levels for most of 2013, with some reversal in policy easing either later this year or early in 2014.
“The Reserve Bank's MPC meeting in January painted a picture of a deteriorating consumer inflation outlook, with consumer inflation now expected to peak at 6.1% in the third quarter of this year,” said Nedbank.
The Monetary Policy Committee will hold its next meeting from 18 - 20 March 2013.
“The January CPI print reinforces our case for the Reserve Bank to maintain its current monetary policy over the next few meetings.
“Risks from recent currency weakness would make it harder for the bank to cut rates at the next MPC meeting. However, we have not ruled out a rate cut this year,” said Standard Bank economist Shireen Darmalingam. - SAnews.gov.za