Pretoria -The Consumer Price Index (CPI) slowed to 5.6% year-on-year in May, Statistics South Africa (Stats SA) said on Wednesday.
CPI which the South African Reserve Bank (SARB) uses to target inflation -- had been in the upper range of the 3 to 6 percent range -- for three consecutive months.
“The headline CPI annual inflation rate in May 2013 was 5.6%. This rate was 0.3 of a percentage point lower than the corresponding annual rate of 5.9% in April 2013. On average, prices decreased by 0.3% between April 2013 and May 2013,” said Stats SA.
Economists had expected inflation to slow to 5.7%
The food and non-alcoholic beverages index was unchanged between April 2013 and May 2013. The annual rate increased to 6.4% in May 2013 from 6.2% in April 2013.
The household contents and services index increased by 0.1% between April 2013 and May 2013 while the transport index decreased by 2% between April 2013 and May 2013, mainly due to a 73c/litre decrease in the price of petrol.
Nedbank economists said the 0.3% monthly decline in inflation can be attributed to the transport index driven by the decline in the petrol price.
"Despite the slowdown in the annual inflation number in May, we still foresee a breach of the 6% upper inflation target range in the third quarter of this year, with the weak rand exerting most of the upward pressure," said the bank.
The reserve bank’s Monetary Policy Committee (MPC) will meet next month to make its decision regarding interest rates which remain unchanged at 5%.
“The latest inflation numbers do not alter our interest rate view. We believe that rates will remain at current levels for the rest of this year. The MPC will need to strike a balance between high inflation and still poor economic growth outcomes, with the current policy stance likely to remain in place well into 2014,” said Nedbank. - SAnews.gov.za
