Inflation edged up last month for the first time since April, reinforcing expectations that the Reserve Bank will keep interest rates unchanged when its monetary policy meeting ends today.

The annual rise in the consumer price index (CPI) ticked up to 5 percent from 4.9 percent in July, boosted mainly by hikes in housing utility costs, as well as fuel and food prices. But the increase was modest enough to keep inflation well inside the 3 percent -6 percent official target range monitored by the Bank for interest rate decisions.

After the Bank unexpectedly trimmed its repo rate in July, there has been speculation that there could be another reduction today, but most analysts believe this is very unlikely.

"Our expectation remains that the Bank’s monetary policy committee will leave the repo rate unchanged," Cadiz Asset Management economist Adenaan Hardien said yesterday. "We remain of the view that the repo rate has bottomed. In our view, further rate cuts would require a meaningful deterioration in economic fundamentals."

The Bank cited an improved inflation outlook, a fragile domestic economy, and an uncertain global backdrop for its decision to cut the repo rate by half a percentage point to 5 percent in July.

The slight pick-up in inflation last month does not tarnish the benign outlook for price pressures in the domestic economy.

"We expect inflation to remain around 5 percent for the remainder of the year," Nedbank economist Busisiwe Radebe said. "Softer spending and a weaker global economy are likely to keep inflation contained through 2012," she said.

On a monthly basis, inflation rose by 0.2 percent, buoyed by higher petrol prices and an increase in tariffs for electricity and water, Statistics SA figures showed.

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