JOHANNESBURG (Reuters) – South Africa’s headline inflation edged back above the upper end of the central bank’s target in September, dimming market bets of an interest rate cut at the regulator’s next policy meeting in November.
South Africa’s headline consumer inflation quickened to 6.1 percent year-on-year in September from 5.9 percent in August, data from Statistics South Africa showed on Wednesday.
On a month-on-month basis, prices were up 0.2 percent after a 0.1 percent contraction previously.
The rand lost its early morning gains after the data was released, and traded 0.15 percent weaker at 1020 GMT.
In September the South African Reserve Bank (SARB) kept lending rates unchanged at 7 percent for a third consecutive time in 2016, and also hinted that it may have reached the end of its tightening cycle.
The bank cited the weak economic growth outlook as a counter balance to persistently high inflation, which it sees averaging average 6.4 percent this year, outside its target of between 3 and 6 percent.
“While the inflation print is better than we expected, we doubt it will make much difference to the SARB,” Africa analyst at Standard Charted Bank Razia Khan said, adding that base-related pressures on the headline number looked set to continue.
“Even if this is not as bad as the SARB initially expected, the likelihood of a VAT increase at some point will likely keep the SARB on hold for an extended period,” Khan said in a note.
(Reporting by Mfuneko Toyana; Editing by James Macharia)