SA inflation stays at 5,9pc

At 5,9 percent, year-on-year inflation is at the upper limit of the South African Reserve Bank’s target band, limiting the bank’s ability to boost the economy though interest rate cuts.

A rate cut could boost economic growth, but may push inflation even higher.
Most economists expected the reserve bank to keep rates on hold.

Nedbank analysts said increase in inflation was higher than 5,7 percent the market expected.
Warning against stagflation — high inflation coupled with low growth — the bank foresaw inflation to breach six percent later this year.

Central bank authorities “need to strike a balance between high inflation and still poor economic growth outcomes, with the current policy stance likely to remain in place well into 2014”, Nedbank analysts said. — AFP.