South Africa inflation hits 15-month high

South Africa’s annual inflation rate rose above the midpoint of the central bank’s target range for the first time in 15 months in February driven by higher fuel prices.

Consumer prices increased 4.6% from a year earlier compared with 4.5% in January, Pretoria-based Statistics South Africa said Wednesday in a statement on its website.

The median estimate of 16 economists in a Bloomberg survey was 4.5%. Prices rose 1% from January, the highest monthly rate since February 2017.

The uptick is unlikely to deter the central bank from cutting the benchmark interest rate on Thursday. More than half of the 21 economists in a Bloomberg survey predict a 50 basis-point reduction.

Bets on easing increased after president Cyril Ramaphosa declared a national state of disaster over the coronavirus pandemic and the US Federal Reserve lowered its main rate to almost zero.

Inflation was driven by a 14% increase in gasoline prices in February compared with the same month last year, but is expected to moderate over the coming months on the back of a sharp decline in oil prices. That could lead to the central bank lowering its price-growth forecast for the year from 4.7%.

The monetary policy committee is also likely to slash its forecasts for the expansion of an economy that slumped into a second recession in two years even before the coronavirus intensified.

Annual core inflation, which excludes the prices of food, non-alcoholic drinks, fuel and electricity, accelerated to 3.8% to from 3.7%.

Read: South Africa’s biggest food retailer points to unprecedented demand – but pleads to stop stockpiling

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South Africa inflation hits 15-month high