South Africa inflation stuck at 5.9%
3/16/2012 7:20:01 AM -
JOHANNESBURG (AFP) - South African inflation remained at the perilously high level of 5.9 percent in March, official data showed on Wednesday.
Amid fears that Africa's largest economy is edging towards stagflation -- defined by high prices and slow growth -- Statistics South Africa reported that the consumer price index was unchanged from February.
At 5.9 percent, year-on-year inflation is at the upper limit of the South African Reserve Bank's target band, limiting the central bank's ability to boost the economy though interest rate cuts.
On Tuesday, central bank governor Gill Marcus issued a blunt warning that the stagflationary spiral must be stopped.
"If you've got slowing growth and rising inflation, it's not a place you want to be in," she told parliament, according to local media.
The South African economy is expected to grow by a modest 2.8 percent this year, well below the African average and compared with Nigeria's 7.2 percent growth or neighbouring Mozambique's 8.4 percent clip.
Africa's largest economy has been hit by violent labour unrest, heightened political risk and a slowdown in key eurozone export markets.
Meanwhile South African consumers, around 25 percent of whom are unemployed, have had to contend with a 7.5 percent increase in transport costs versus March last year.
Prices have also been pushed upward by a weakening of the rand, which has made imports more expensive.