South Africa central bank says elevated core inflation weighing on prices outlook

JOHANNESBURG (Reuters) – The South African Reserve Bank (SARB) said on Tuesday that headline inflation had peaked but core inflation remained elevated, putting upward pressure on the consumer prices outlook.

The central bank in its April Monetary Policy Review said rolling power cuts also continued to slow growth, reiterating that they would shave off up to 2 percentage points from the growth outlook in 2023, double the impact estimated in the previous year.

South Africa has had just one day of uninterrupted power in 2023 as state power utility Eskom struggles to keep the lights on in Africa’s most industrialised economy.

The SARB said headline inflation has peaked since the July 2022 high of 7.8%, but core inflation – which excludes prices of food, non-alcoholic beverages, fuel and energy – remained high.

“Rising core inflation is expected to slow the pace of disinflation in headline inflation in the near term,” the central bank said.

South Africa’s headline inflation stood at 7.1% year on year in March.

(Reporting by Kopano Gumbi; Editing by Bhargav Acharya and Olivia Kumwenda-Mtambo)