South Africa’s annual headline inflation rate jumped to 6.2 percent in January, breaking through the top end of the central bank’s target range, official statistics showed Wednesday.
A sharp fall in the rand currency and the worst drought in a century pushed food prices higher, taking the consumer price index up from December’s annual rate of 5.2 percent and through the six percent target ceiling set by the bank.
Inflation is increasing at the same time that growth is slowing, with the World Bank and the IMF predicting economic growth will drop to less than one percent this year.
Analysts say the rise in the inflation rate puts pressure on the central bank to increase interest rates further after hiking its benchmark repurchase rate by an aggressive 50 basis points to 6.75 percent in January.
“We believe the bank will revert to the usual 25 basis points rate hikes in each of the following three meetings,” Nedbank’s economic unit said in a commentary.
“Our forecast is for inflation to end the year at around 7.3 percent.”