South Africa is experiencing an increase in its inflation rate which now stands at 5.2%. Faced with this situation, some analyst say the Central Bank could raise interest rates next week.
According to Statistics South Africa, the inflation rate rose from 4.8 percent in November.
The rand’s exchange value has dropped against the dollar in the past three months. This has fueled inflation and threatened the Central Bank’s target which could raise the benchmark rate before the end of the month.
South Africa’s growth forecast by the IMF has been cut by half due to a drop in commodity prices. The current drought has also contributed to the high inflation rates.
Some experts have suggested that the country’s GDP is expected to expand by 0.7 percent compared to an estimate of 1.3 % in October last year.
Another report from Barclays Africa Group Ltd. this week placed the 2016 growth forecast of Africa’s largest economy to 0.9 percent from 1.4 percent.
A new growth forecast from South Africa’s finance minister will be announced in his budget speech next month.