CAPE TOWN: South Africa’s inflation rate unexpectedly climbed back above 5 per cent in September, highlighting the central bank’s struggles to combat sluggish growth at the same time as rapid price rises. The South African Reserve Bank cut interest rates for the first time in five years in August in a bid to boost growth after the economy experienced a brief recession at the start of the year. However, it resisted calls for a second cut last month as evidence mounted that inflation had not been brought completely under control.
So-called “stagflation” – stagnant growth combined with high inflation – is a difficult challenge for central banks, as inflation and growth typically move in the same direction, meaning measures to boost sluggish growth risk causing a sharp increase in prices. Data released on Wednesday underscored that problem, with consumer prices rising an average of 5.1 per cent in the year to September, up from 4.8 per cent the previous month. Economists surveyed by Reuters had expected only a small lift to 4.9 per cent.
