Statistics South Africa says the country’s consumer price inflation has surprisingly dropped from 6.2 percent in April to 6.1 percent in May.
Stats SA data shows that on average, prices rose by 0.2% between April 2016 and May 2016.
The consensus forecast, the CPI was expected to increase slightly from 6.2% year-on-year in April to 6.4% in May.
According to Overberg Asset Management, the CPI has exceeded the South African Reserve Bank’s 3% to 6% CPI target since January, mostly due to steep drought-induced food price inflation.
Adding that, there is growing evidence of pass-through inflation from the weaker rand.
Slightly below the consensus forecast of 6.4% and notably below the upper end of the consensus range of 6.0%, FNB predicted a May figure of 6.3%.
Jeffrey Schultz, an economist at BNP Paribas Securities, told Bloomberg that the bottom line for the Reserve Bank is that CPI still remains outside the upper 6 percent inflation-target band.
“While this does give them some breathing room, I think the scope for upside CPI surprises in the second half of the year is still very much there.”
The SABC reported that core inflation, which excludes the prices of food, non-alcoholic beverages, petrol and energy, remained unchanged at 5.5% year-on-year in May but edged slightly lower to 0.2% month-on-month from 0.3%.