South Africa Consumer Price Inflation Accelerates Slightly in May

South Africa's headline consumer inflation rose slightly more than expected to 5.4% year-on-year in May from 5.3% in April, data from Statistics South Africa showed on Wednesday, further weakening the rand.

Based on a seasonally adjusted term, the overall CPI for May 2017 decreased 0.2% as compared to April 2017.

In April, the CPI rose 4.4% from a year earlier, according to the department.

CIMB Investment Bank's economics research head Michelle Chia maintains her full year inflation forecast at 3.5 percent.

"While food inflation inched up ahead of the fasting month, global oil prices continued to weaken in June". Bank Negara Malaysia kept the policy rate unchanged at its most recent meeting, noting that price pressure across the broader economy will likely remain muted due to stable domestic demand.

The food and non-alcoholic beverages index increased by 6.9% year-on-year (y/y), while the transport index increased by 5.2% y/y, Stats SA said. The index for transport group, that includes gasoline and diesel, surged 13.1% year-on-year.

The SARB has been reluctant to cut its main repo rate from the current 7%, saying it first wants to see a sustained decline in the inflation rate.

  • Zachary Reyes