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JOHANNESBURG May 24 South Africa's headline
consumer inflation fell to within the central bank's target
range in April as food price rises slowed, data showed on
Wednesday, sending the rand currency to a new 4-week high and
boosting hopes for a rate cut later this year.
The annual inflation slowed to 5.3 percent in April from 6.1
percent in March, Statistics Africa data showed, beating market
expectations of a 5.55 percent year-on-year print.
On a month-on-month basis, inflation fell to 0.1 percent in
April from 0.6 percent previously.
The South African Reserve Bank, which is due to announce its
latest interest rates decision on Thursday, targets annual CPI
of between 3 percent and 6 percent.
Economists polled by Reuters expect the central bank to keep
the repo rate unchanged at 7 percent this month, but a cut later
in the year is being priced in.
"Today’s inflation figure supports our view that the Reserve
Bank will cut its key policy rate later this year," Capital
Economics Africa economist John Ashbourne wrote in a note.
"Policymakers will, however, probably keep their key rate on
hold at their meeting tomorrow. We expect that they will wait
until inflation is more securely anchored within the target
range before loosening policy."
Food inflation, which climbed close 12 percent in 2016 as
the worst drought in decades swept through southern Africa,
continued to retreat, slowing to 6.7 on a yearly basis.
The CPI data pushed the rand to 12.9825 per dollar,
a fresh 4-week high. By 0903 GMT, the rand had retreated to
13.0025/dollar, 0.71 percent firmer than its overnight close.
In fixed income, government bonds also firmed with the yield
for the benchmark paper due in 2026 dipping 7.5 basis
points to 8.485 percent.
(Reporting by Olivia Kumwenda-Mtambo; Editing by James