South Africa’s inflation rose slightly in April due to soaring food prices in the country, according to the latest data released by the statistics agency. The marginal increase puts the headline consumer inflation at 2.8% year on year, an increase from the 2.7% recorded in March.
On month-month terms, the inflation was 0.3% in March, later hitting 0.4% in April. Economists polled by Reuters had forecast annual inflation would remain steady at 2.7%, below the central bank’s 3% to 6% target range.
Deputy Finance Minister David Masondo said last week that a new inflation target could be announced soon, leading to speculation that it could feature in Wednesday’s budget presentation.
South African Reserve Bank Governor Lesetja Kganyago has for years stressed his preference for a lower inflation target, saying it is needed to make the economy more competitive.
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But Finance Minister Enoch Godongwana, who would need to sign off on a lower target, has been reluctant, citing inflationary risks from pervasive poverty and high unemployment.
The prospect of a lower inflation target has lifted the rand, with economists saying a lower target would reduce the likelihood of further interest rate cuts.
The next monetary policy announcement by the central bank is scheduled for May 29.
