South African inflation rises modestly; most analysts still expect rate hike

By Nilutpal Timsina

JOHANNESBURG, Sept ‌23 (Reuters) - South ​African inflation ​picked up slightly in August, but analysts said the smaller-than-expected uptick was unlikely to influence the central bank's ‌interest-rate announcement later in the day.

• Headline inflation was ⁠at 4.4% year-on-year, up from 4.3% in July but below the average forecast ‌of 4.5% in a Reuters ‌poll of economists, Statistics South Africa data showed on Wednesday.

• Most economists expect the South African Reserve Bank to increase its ​monetary policy rate by 25 basis points to 7.25% in a decision due around 3 p.m. local time (1300 GMT).

• The ⁠central bank, which targets inflation of 3%, tends to focus on the outlook for upcoming ​inflation readings rather than looking backwards.

• "This has no impact on the MPC (Monetary Policy Committee) decision that we ​will hear later today. The MPC concluded ‌its forecasting and modelling runs last week already," said Johann Els, chief economist at PSG Financial Services.

• ⁠Statistics South Africa said the inflation increase was mainly driven by the housing and utilities, transport, and insurance and financial services categories.

• Food and ⁠non-alcoholic beverages inflation was among the lowest categories at 1.1%, with analysts saying ​strong crop production should help keep food price pressures contained despite risks from an anticipated El Nino weather event.

• Annual core inflation, which strips out ‌volatile items like food and energy, eased to 4.1% in August, slightly below economists' forecast of 4.2%.

• ‌South Africa's central bank surprised investors and economists by keeping rates ⁠unchanged in July, saying its ‌policy stance was ​restrictive enough to return inflation to target within two years.

(Additional reporting by Sfundo Parakozov;Editing by Alexander Winning and ‌Xevi Fontdegloria)

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