CPI falls within target range at 5.9%

Wednesday, November 25, 2009

Pretoria - The Consumer Price Index for October 2009 fell within the South African Reserve Bank's (SARB) inflation target range at 5.9 percent, reported Statistics South Africa (Stats SA).

This is the first time in 31 months that the annual inflation rate has fallen within the bank's monetary policy target range. The target range for inflation is between 3 and 6 percent.

"On average, prices remained unchanged between September 2009 and October 2009," said the statistical body on Wednesday.

The CPI is used to measure South Africa's inflation. In October, the rate was 0.2 percent lower than the annual rate recorded 6.1 percent rate recorded in September.

Market consensus was that it would fall to 5.9 percent in October.

Standard Bank economist Danelee van Dyk told BuaNews that this meant individuals in need of a lifeline when coming to things like food would see prices coming down. She said items would gradually become more affordable and this should help ease the pressure off individuals.

"The figure is encouraging. We are seeing inflation fall below the target range. However, we still see that services inflation is higher and we do caution that the trend is not likely to continue due to expected petrol price increases of 29c/l next month which could see inflation falling out of the target range," she explained.

Nedbank economist Isaac Matshego told BuaNews that the figure was in line with market consensus and what the bank had expected.

"We expected it to fall at 5.9 percent. This is good news. Inflation is moderating in line with expectations. We also see that food and transport costs are coming down which is good news.

"However, the release of the petrol price could reverse matters," said Matshego.

The petrol price will be released on Friday.