Interest rates likely to be put on hold

Consumer inflation eased in March as the return of rainfall following a severe drought cut into food price inflation.

The slide - to 6.1% year on year in March from 6.3% in February - bolstered the likelihood the central bank will keep interest rates on hold despite recent shocks to the currency. On a month-on-month basis inflation fell to 0.6% from 1.1%, Stats SA said yesterday.

The rand retreated about 12% after President Jacob Zuma's fired respected finance minister Pravin Gordhan last month. The firing led in part to two credit downgrades to "junk" and a spike in investor concerns over the direction of fiscal policy.

Such moves would boost inflation, pressuring central banks to raise interest rates.

But Paul Sirani, chief market analyst at Xtrade, said: "Today's figure shows prices are heading in the right direction. P olicymakers are likely to sit on their hands and seek further reassurance from next month's figures."