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Inflation has foot on gas

21 May 2015 - 02:07 By ©BDlive 2015

The lashing dished out by the petrol price increase is showing up as nasty welts in Statistics SA's economic data. Inflation rose to a four-month high in April, reflecting the sharp March petrol price hike, the agency said yesterday.Inflation's rise to 4.5% year-on- year in April from 4% year-on-year in March was the second consecutive month of acceleration.Prices increased by 0.9% between March and last month.Though inflation has been edging higher, it still remains within the 3% to 6% target band, which should support interest rates remaining on hold when the Reserve Bank's monetary policy committee meets today.Nedbank economists said muted economic growth, together with inflation that was forecast to end the year just below the upper end of the target range, would probably persuade the Bank to keep rates on hold for most of this year."It is the start of an upward trend in the consumer price index, driven partly by higher oil prices. Electricity price increases are expected to be large this year, which will add upward pressure to inflation," KADD Capital economist Elize Kruger said.Efficient Group economist Francois Stofberg also expected inflation to accelerate "to 6% due to higher petrol prices by December".The rand weakened on the inflation news, but bounced back against the dollar in late afternoon trade yesterday. However, the currency was range-bound ahead of the interest rate decision.The rand had analysts perplexed as it had been expected to strengthen early in the day on news of this week's public sector wage deal, with labour unions accepting a 7% increase. ..

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