South Africa’s CPI reveals moderate inflationary increases in Feb 2019

South Africa's consumer price index (CPI) for February 2019 revealed a modest increase in inflation, with the index rising by 0.8% month-on-month and 3.6% year-on-year. The CPI rose by 0.1% to 4.1% month-on-month, aligning perfectly with market expectations. Nesan Nair, Senior Portfolio Manager at Sasfin Securities, joined CNBC Africa to analyze these numbers. Nair pointed out that transport costs, influenced by the strong oil price and weaker rand, were a significant driver of inflation. He highlighted that with expected fuel price hikes and government tax increases, inflation could climb further to target levels of 5-5.5%. Additionally, food, housing, water, and electricity prices have all increased, contributing to inflationary pressures. While the Reserve Bank anticipates a gradual rise in inflation, Nair believes they will maintain their current monetary policy stance for 2019, with a focus on price stability rather than growth. However, he emphasized the importance of revising the bank's mandate to prioritize employment, especially youth employment, over price stability. Despite criticisms, Nair commended the Reserve Bank for maintaining inflation within target ranges, acknowledging the challenges posed by volatile fuel prices and exchange rates. Moving forward, the debate continues on whether the bank should consider adjusting its mandate to foster economic growth amidst rising inflation and a challenging employment landscape.