South Africa's headline consumer inflation edged up as expected last month, but analysts said the increase would be far larger in April when fuel price hikes triggered by the U.S.-Israeli war on Iran have filtered through into consumer prices.
Headline consumer inflation accelerated to 3.1% from a year earlier in March from 3.0% in February (ZACPIY=ECI), opens new tab, matching a Reuters poll, statistics agency data showed on Wednesday, News.az reports, citing Xinhua.
Inflation is set to accelerate to about 4% in April, when domestic fuel prices surged despite the government temporarily reducing a fuel levy to try to mitigate the impact of the Middle East conflict.
South Africa imports most of its petroleum products, leaving it highly exposed to swings in global energy prices.
Nedbank economist Johannes Khosa said electricity tariffs also went up by more than 8% in April, which will add further upward pressure on prices.
Khosa said the risk of an interest rate hike at one of the South African Reserve Bank's (SARB) next two policy meetings in May and July had increased materially.
The central bank left its policy rate unchanged at 6.75% (ZAREPO=ECI), opens new tab at its last meeting in late March.
It targets inflation of 3% with a 1-percentage-point tolerance band on either side.
"What will be impacting the SARB's decision is the next release, for April, as the fuel price spike will then reflect and will be telling," independent economist Elize Kruger said.
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