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Minister of Cooperative Governance and Traditional Affairs Des Van Rooyen. Picture Credit: Gallo Images
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CPIX will continue rising

By unknown | Oct 30, 2007 | COMMENTS [ 0 ]

Figures last week showed the increase in CPIX leaping by an annual 6,7percent and the PPI by an annual 9,4percent. This will put further pressure on consumer prices.

It is the sixth month in a row that the CPIX reached the upper end of its three percent to six percent target range.

Food prices at agricultural level rose to an annual rate of 24,4percent and 16percent at manufacturing level, with wholesale food prices still soaring, keeping upward pressure on retail inflation.

But a period towards demand-driven food products at retail and manufacturing level is a significant discomfort to the Reserve Bank as consumers splurge out on food.

Credit extensions and buying patterns will change significantly, leaving the Reserve Bank's monetary policy committee with no alternative but to increase the repo rate by another 50 basis points in their next meeting in December.

Vunani Securities economist Johan Rossouw says: "It remains an open question whether the forward-looking focus of the Reserve Bank's monetary policy committee will stop another interest hike". So, the CPIX figures are expected to rise between seven percent and eight percent in the first quarter of next year.

Jonas Ramaoka, Polokwane


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