SA’s Consumer Price Index under control but risks remain: central bank governor

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JOHANNESBURG (Reuters) – South Africa’s consumer price inflation is under control but it is too early for the central bank to declare victory in its pursuit to anchor inflation expectations closer to the midpoint of the 3-6 percent target range, Governor Lesetja Kganyago said.

South Africa’s CPI slowed to 3.8 percent in March, the lowest figure since January 2011, as the end of the worst drought in decades helped push down food prices.

In a speech posted on the South African Reserve Bank (SARB) website on Wednesday, Kganyago said the benign inflation environment was not expected to continue as the expectation was the March reading was the low point in the current cycle.

“Inflation appears to be under control, but there are incipient risks,” Kganyago said.

He said the SARB would need to see further declines in CPI, or at least a stabilisation at recent levels, to feel confident that inflation expectations have fallen on a sustained basis.

“In other words, it is too early to declare victory in our quest to anchor inflation expectations closer to the midpoint of the target range,” Kganyago said.

The central bank cut its main interest rate by 25 basis-points to 6.5 percent in March on the back of easing inflation but said that it expected consumer prices to rise above 5 percent in the medium term.

The next rates decision will be announced on May 24.

Reporting by Olivia Kumwenda-Mtambo; Editing by James Macharia

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Godwin Okafor is a Financial Journalist, Internet Social Entrepreneur and Founder of Naija247news Media Limited. He has over 16 years experience in financial journalism. His experience cuts across traditional and digital media. He started his journalism career at Business Day, Nigeria and founded Naija247news Media in 2010. Godwin holds a Bachelors degree in Industrial Relations and Personnel Management from the Lagos State University, Ojo, Lagos. He is an alumni of Lagos Business School and a Fellow of the University of Pennsylvania (Wharton Seminar for Business Journalists). Over the years, he has won a number of journalism awards. Godwin is the chairman of Emmerich Resources Limited, the publisher of Naija247news.