South African consumer inflation quickens to 3.6% y/y in October

South African inflation rose slightly in October, but by less than expected, prompting analysts to predict Thursday’s interest rate decision by the central bank was likely to be a close call.

Headline consumer inflation climbed to 3.6% year-on-year from 3.4% in September, staying within the 1 percentage point tolerance band of the central bank’s new 3% target announced last week.

Economists polled by Reuters had predicted 3.7%.

A breakdown by Statistics South Africa showed categories like transport and recreation recorded hotter rates in October, but price pressures cooled for others like restaurants and food.

Before Wednesday’s data, economists had been split on what the South African Reserve Bank (SARB) would decide at this week’s monetary policy meeting.

Fourteen polled by Reuters predicted it would keep its repo rate at 7.00% and 15 forecast a 25 basis point cut.

Independent economist Elize Kruger, one of those who had been in the “hold” camp, said