By Sfundo Parakozov and Tannur Anders
JOHANNESBURG (Reuters) -South Africa’s inflation rate rose for the second month in a row in December but by less than expected, with analysts saying the central bank was still likely to deliver another interest rate cut next week.
Headline consumer inflation ticked up to 3.0% year on year in December from 2.9% in November, with housing and food major contributors, Statistics South Africa data showed on Wednesday.
Economists polled by Reuters had expected a rate of 3.2%, still well below 4.5% – the level the South African Reserve Bank (SARB) aims for.
“The smaller-than-expected rise in South Africa’s headline inflation rate … combined with the recent recovery in the rand, supports our view that the SARB can continue with its easing cycle,” said David Omojomolo, Africa economist at Capital Economics.
Average inflation for 2024 was 4.4%, the lowest level in four years.
Economists expect the South African Reserve Bank’s Monetary Policy Committee to deliver another 25 basis-point rate cut at its next policy announcement on Jan. 30.
It cut interest rates by 25 basis points at its last two policy meetings in September and November.
Annual core inflation, which excludes food and energy prices, came in below expectations at 3.6% in December, reflecting modest underlying price pressures.
“We expect inflation to drift higher in 2025 but remain below 4.5% for most of the year. The upward pressure will mainly emanate from food and fuel prices,” Nedbank economists said in a research note.
(Reporting by Tannur Anders and Sfundo Parakozov;Editing by Alexander Winning and Christina Fincher)
