Consumer inflation creeps up in March

Statistics SA cited the increase in sin taxes, the fuel price and education fees as the reason for the slight increase.

Econometrix chief economist Azar Jammine says the jump in consumer inflation comes as no surprise.

 "The increase from 4.1% to 4.5% was very much expected. In fact, most people expected inflation to come in at 4.6 or 4.7%, so 4.5% is a very positive outcome. Most analysts knew that the impact of higher prices of petrol was going to be substantial."

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Jamine says the year-on-year increase of the price of fuel is the main reason for the increase.  

"It has a contribution of nearly 5% in the basket of goods that people consume, so that on its own accounts for virtually the entire 0.4 % increase in inflation. In fact, in the contrary, the inflation of rental rates fell quite sharply and onus equivalent then fell from an inflation rate 3% to 2.6% illustrating the extent to which the housing market is weak at the moment and that certainly prevented the inflation rate from rising even further."

Inflation is expected to increase again in May.

"Unfortunately, one can expect inflation to increase in the coming months. This due to the fact that fuel prices rose even more sharply in April and are expected to rise again in May and on top of that we have electricity tariffs increases to accelerate from July onwards. It's also quite likely that food inflation will begin to rise."

Jammine believes the upwards trajectory in inflation could lead to the Reserve Bank deciding to raise interest rates when its monetary policy committee makes an announcement on Thursday.

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