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BL Premium reports that the SA Reserve Bank (SARB) is sticking to its 2023 inflation forecast that consumer prices will return to its target band later in the year, even though consumer inflation unexpectedly accelerated in March.
In an interview on Wednesday, governor Lesetja Kganyago said inflation would return to the 3%-6% target range in the fourth quarter as previously forecast despite the sticky food inflation, which he acknowledged caught the Bank by surprise. “We were surprised by food prices. We expected food prices to rise by 13%, but they rose over 14%. Worryingly is that global food prices in dollar terms have come down significantly and food prices in SA are still climbing in an environment where we have actually had good rains,” Kganyago observed. “It talks firstly to a weaker rand exchange rate that is keeping food prices sticky and secondly there are idiosyncrasies affecting inflation,” he explained, referring to extra costs incurred by businesses to provide alternative backup power as Eskom struggled to provide adequate energy supply. His comments came after Stats SA data showed that headline consumer price index (CPI) rose for the second time in a row in March, raising the odds that the central bank could again hike interest rates during its meeting in May. Agricultural Business Chamber (Agbiz) chief economist Wandile Sihlobo expects domestic food inflation, at a 15-year high, to begin to moderate in the second half of the year. “For April, we will likely see the continuation of the tail-end effects of the high grain prices of last year. If sustained, the current relatively cheaper grain prices will filter mainly in the year’s second half,” he said.
- Read the full original of the report in the above regard by Andries Mahlangu at BusinessLive (subscriber access only)
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