By Kopano Gumbi and Tannur Anders
JOHANNESBURG (Reuters) – South African inflation rose for the second month in a row in March to 7.1% year on year, driven by a steep increase in food prices, data showed on Wednesday.
Economists said the pickup in inflation, from 7.0% in February, meant the central bank would probably raise interest rates again next month.
Wednesday’s reading was a surprise: analysts polled by Reuters had predicted a drop in March inflation to 6.9%.
Inflation for food and non-alcoholic beverages stood at 14.0% in March, the largest annual increase in 14 years.
The South African Reserve Bank (SARB) has hiked interest rates nine times in a row since November 2021 to try to tame inflation.
At its last meeting in March, the SARB — which targets inflation between 3% and 6% — surprised analysts with a larger-than-anticipated 50 basis point hike.
Wandile Sihlobo, a chief economist at the Agricultural Business Chamber of South Africa, said in a research note that he expected food price increases to remain elevated in the coming months when they would likely peak.
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First National Bank senior economist Koketso Mano said it appeared that power constraints were exacerbating local food inflation.
Core inflation, which excludes prices of food, non-alcoholic beverages, fuel and energy, was at 5.2% year-on-year in March, the same as in February, Statistics South Africa figures showed.
Consumer inflation rose to 1.0% month on month in March from 0.7% in February.
Virág Fórizs, emerging markets economist at Capital Economics, said in a note that a 25 basis point hike at the SARB’s May 25 meeting now seemed probable.