StatsSA released the February consumer inflation data today, indicating that CPI rose by 9.8% y:y (January: 9.3%), while CPIX increased by 9.4% y:y (January: 8.8%). According to the Efficient Group, both these figures were inline with our expectations (and market consensus) and indicate that the inflation problem continues to escalate.
As CPIX is now almost in double-digit territory the possibility of another rate hike announcement in two weeks’ time is becoming more likely....
CPIX has now been outside the target inflation rate for 11 consecutive months, and the 9.4% y:y rise in February is the strongest rise since January 2003 (10.0%). Our calculations indicate that CPIX should remain above the 9.0% level during the first half of 2008, and could remain above 8.0% for the whole of 2008.
The changes in the data collection process for the clothing and footwear item - items on discount, i.e. sale will no longer be included from January 2008 onwards - poses some comparison problems (StatsSA published an Explanatory Note on this).
Another factor to be considered in February’s figures are the updated wages of domestic workers that should have been included in the month’s data, but that the information from StatsSA’s Labour force Survey was not received in time for inclusion.
Domestic workers (falling into the household operations sub-sector) has a weight of 3.6% in the CPIX basket and the (not yet updated) item rose by 9.5% y:y in February 2008.