South African inflation number shocks on the high side

South Africa’s consumer inflation quickened faster than expected in December to 5.9% year on year, from 5.5% in November, data showed on Wednesday, adding to arguments for the central bank to raise interest rates next week.

On a month-on-month basis, the December consumer price index was at 0.6% from 0.5% in November.

Analysts polled by Reuters had forecast a 5.7% rise in annual terms in December and a 0.4% increase month on month.

The South African Reserve Bank, which targets inflation of between 3% and 6%, holds its first monetary policy committee meeting of 2022 next week, with its decision due on 27 January.

A poll published by Reuters on Wednesday predicted a 25 basis point increase in the repo rate to 4% to combat inflationary pressures.

Statistics South Africa said the 5.9% year-on-year reading in December was the highest since March 2017, citing rising prices of fuel and foods such as meat among contributing factors.

Core inflation, which excludes food, non-alcoholic beverages, fuel and energy, rose to 3.4% year on year in December from 3.3% previously. On a month-on-month basis, core inflation was at 0.3% from 0.1% in November.  — (c) 2022 Reuters