South Africa\u2019s electricity tariff increases could push the inflation rate up by a 0.75 percentage point, Reserve Bank deputy governor Kuben Naidoo said.<\/p>\n
The nation\u2019s energy regulator said last week Eskom Holdings SOC Ltd. can raise electricity prices by 9.4% from 1 April, taking the total increase to 13.8%.<\/p>\n
That\u2019s almost 50% more than the assumption the central bank used in its latest projections for 2019, which forecast inflation will stay below 5% this year.<\/p>\n
The Reserve Bank increased its key interest rate for the first time in more than two years in November, even as the economy had just come through a recession and hasn\u2019t expanded at more than 2% annually since 2013.<\/p>\n
It kept borrowing costs on hold in January and trimmed its projection for policy tightening as it lowered its inflation forecast.<\/p>\n
While the central bank doesn\u2019t position itself as being in a hiking or softening cycle, \u201cit is no secret that the US is now in a softer interest-rate cycle and this will lessen pressure on the rand,\u201d Naidoo said Wednesday at a conference in Cape Town.<\/p>\n
Inflation slowed to a 10-month low of 4% in January<\/p>\n