South Africa: CPI Accelerates to 3.2 Percent in March, Economists Say Price Pressures Still Muted

South Africa's consumer price index (CPI) accelerated to 3.2% in March from 2.9% in February, driven in part by rising food prices. But economists expect these to moderate and price pressures remain muted.

Inflation picked up pace in March, but there are no real red flags on the immediate price horizon that might prompt the central bank to raise rates. Statistics South Africa (Stats SA) said on Wednesday that the benchmark CPI quickened to 3.2% in March from 2.9% in February. That remains near the bottom of the South African Reserve Bank's (SARB) 3% to 6% target range.

"A low base in the second quarter of 2020 coupled with sharply higher energy costs could well see CPI inflation sustaining its upward trend, possibly even reaching 5% in coming months," RMB Chief Economist Ettienne le Roux said in a commentary on the data.

"There is little reason for alarm, however. Beyond a likely short-lived acceleration, the medium-term outlook for CPI inflation remains encouraging," he said.

Le Roux also mentioned an interesting trend that is helping to contain inflation.

"... in response to 2020's deep recession, efficiency benefits resulting from corporate restructurings, new cost-saving initiatives and increased...

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