Since bottoming out at 3.9% in February last year, consumer inflation has increased steadily, reaching a recent peak of 7% in February this year. It has moderated somewhat since then, registering 6.2% in April. The acceleration has not been due to excessive demand for goods and services. Core inflation has been relatively well contained, averaging 5.5% last year and 5.5% so far this year.This reflects the weak state of the economy and, in particular, very weak growth in domestic spending, which in real terms grew by an anaemic 0.6% and 0.3% in 2014 and 2015 respectively.Cost push factors are to blame. These include the surge in food prices caused by the reduced supply of certain agricultural products due to the drought.story_article_left1There is some evidence that the weak exchange rate is placing upward pressure on items with high import content, although it remains lower than what has been the case historically.The white maize price has been on a steep upward trend since the third quarter of 2014, when it traded just below R1,700/ton. The price has increased from there to a peak just shy of R5,300/ton in January this year. It is currently trading close to R5,000/ton. The domestic wheat price is also around the R5,000/ton level.There has been a considerable increase in domestic food inflation as a result. From an annual rate of 4.3% in June last year, food inflation has accelerated to 11.3% in April. Bread and cereals, oils and fats, and fruit and vegetable prices are the main drivers of the steep rise.The April levels of these components of the food inflation basket are at least 15% higher than what they were a year ago.The acceleration in food inflation is likely to continue, with the peak expected only in the fourth quarter of this year. Guidance from agricultural experts suggests we are likely to get relief next year as the El Niño weather pattern, which is associated with dry weather, changes into a La Niña pattern, associated with higher rainfall.The result will be a normalisation of product supply and moderation in food inflation over the course of 2017.There has been a persistent depreciation of the rand over the past few years. The exchange rate has depreciated from an average rate of R9.65 to the dollar in 2013 to a trading range of between R14.20 and R16.94 so far this year.The impact on inflation over the past few years has been lower than what the historic statistical relationship would suggest.However, the impact of the rand's weakness is evident in some components of the inflation basket, placing further upward pressure on inflation.story_article_right2For example, spending on durable goods such as vehicles and appliances has been contracting for almost two years, yet prices have been rising. Vehicle inflation accelerated to 7.4% in April from less than 4% in August 2015.Appliances, hardware and equipment inflation was recorded at 6.8% in April this year, up from 2.3% in July last year.The weaker exchange rate is also placing upward pressure on inflation through the influence it has on food prices, given that some of the shortages must be imported. It also places pressure on the petrol price, by making the rand oil price higher than it would be otherwise.Consumer inflation is likely to accelerate for the rest of this year due to further increases in food prices, a higher petrol price, high increases in important administered prices such as electricity and municipal rates, and the weak rand.Inflation is expected to peak above 7% in the fourth quarter of this year, averaging around 6.5% for the year. It is likely to moderate steadily thereafter, ending 2017 at around 5.5% with an annual average of close to 6%. For the expected moderation not to happen next year, the rand would have to undergo a further significant and sustained depreciation, food prices would have to continue rising unabated and the oil price would have to increase faster than expected.Nxedlana is FNB's chief economist..