Inflation Spiral accelerating – currently at 5.2%

South Africa’s annual consumer price inflation increased to 5.2% in December 2015, in line with expectations and 4 percentage points higher than November’s 4.8% rise. It was the highest rate for the year as consumers battle with increased food and fuel prices and interest rate hikes.

On average, prices rose by 0.3% between November 2015 and December 2015, Statistics SA announced yesterday. In December the CPI for goods increased by 5.3% year-on-year (3.8% in November), and the CPI for services increased by 5.7% year-on-year (5.7% in November).

The rand held steady at around ZAR 16.83/US$ from ZAR 16.88 before the data’s release.

The SA Reserve Bank (SARB) increased the repo rate by 25 basis points at its last monetary policy committee meeting, citing inflationary pressures as a reason for hiking interest rates. South Africa has seen a total increase of 125 basis points in interest rates since the SARB started its tightening cycle 23 months ago.

Inflation is however still under control and within the SARB’s target range of between 3% and 6%.

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