South Africa’s inflation rate rose more than forecast in August

South Africa’s annual inflation rate rose more than forecast in August as food prices grew at the fastest pace in more than a year.

Consumer prices grew 4.3% compared with 4% in July, the Pretoria-based Statistics South Africa said Wednesday in an emailed statement. The median estimate of 16 economists in a Bloomberg survey was 4.2%.

Food inflation quickened to 3.8% in August, from 3% the previous month. That’s the highest rate since February 2019. The category for bread and cereals was one of the biggest drivers of this increase. The subindex for housing and utilities rose 5.3% driven by electricity prices.

While inflation has remained at or below the 4.5% midpoint of the central bank’s target band every month since December, the surge in oil prices following a drone strike on Saudi Arabian oil facilities could add upward pressure on price growth if it leads to an increase in gasoline and diesel cost. Fuel makes up 4.6% of South Africa’s inflation basket.

The Monetary Policy Committee is due to vote on the benchmark interest rate Thursday. The chances of a 25 basis point cut fell to 50% on Wednesday from 72% on Sept. 13 before the attack. All but four of the 18 economists in a Bloomberg survey forecast the central bank will maintain the rate at 6.5%.

The MPC will likely update its oil-price assumptions and inflation forecast for the year, which are currently at $67 per barrel and 4.4%.

Read: South Africa inflation rate drops to six-month low in July

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South Africa’s inflation rate rose more than forecast in August