(Bloomberg) — South Africa’s inflation rate fell to a four-year low of 3.9 percent in February, giving the central bank room to extend the pause in its policy-tightening cycle.
Inflation slowed from 4.4 percent in January, the Pretoria- based statistics office said on its website on Wednesday. The median estimate of 25 economists surveyed by Bloomberg was 3.8 percent. Prices rose 0.6 percent in the month.
While falling oil prices last year helped to curb inflation in Africa’s second-largest economy, Brent crude rose 18 percent in February, boosting gasoline costs. A drought in some parts of the country may also add renewed pressure to food prices, the central bank said in a report on Tuesday.
“This is the trough of inflation and it will start to increase due to the rand-dollar exchange rate, rising oil prices and higher food prices,” Busisiwe Radebe, an economist at Nedbank Group Ltd. in Johannesburg, said by phone on Tuesday. “The Reserve Bank will have to balance two things, growth and inflation, and may keep rates on hold for most of this year.”
Policy makers have kept the benchmark repurchase rate unchanged since raising it to 5.75 percent in July as inflation stayed inside the bank’s 3 percent to 6 percent target range. The next rate decision will be made on March 26.
