Price increases for food items may have peaked in South Africa, according to analysts when commenting on inflation figures released here Wednesday.

The South African Rand held onto gains against the US dollar on Wednesday as data showed that headline consumer inflation rose while retail sales growth slumped, bolstering expectations that an interest rate cut is unlikely in 2016.

Statistics South Africa (Stats SA) Wednesday announced that headline consumer inflation had quickened to 6.1 per cent year-on-year in September from 5.9 per cent in August, suggesting that policymakers will keep the benchmark repo rate at 7.0 per cent in November, maintaining attractively high returns for foreign investors.

BNP Paribas securities economist Jeffrey Schultz said: “We have to acknowledge, however, the stark political risks which remain in the system which have the potential to derail the currency, and hence inflation and inflation expectations next year.

“This is why we think that the (central) bank will continue to communicate at its next meeting on 24 November that, at this stage, the bar for monetary easing remains high.”

South Africans, feeling the impact of the tough economic conditions, are staying away from the shops. Retail sales slowed more than expected to 0.2 per cent year on year, indicating consumers are under tremendous pressure.

Consumer confidence is low on the back of weak economic prospects. High levels of unemployment, high debt levels, higher inflation and interest rates are affecting consumers.

The main contributors to the 0.2 per cent increase were general dealers and pharmaceuticals.

Consumers are staying away from durable goods like furniture.

Source: Nam News Network