A rise in the prices of fuel and power caused the consumer price index (CPI) for the year ended July to increase to five percent, Statistics South Africa said on Wednesday.

The CPI had increased by 0.1 percent from June's 4.9 percent. Stats SA said the CPI for fuel and power had increased to 6.6 percent from June's 0.9 percent rise.

Also, housing costs had increased by 4.4 percent from a 3.8 percent rise for the same periods.

The annual percentage change in the CPIX, which is the consumer price index excluding interest rates on mortgage bonds, similarly increased from 4.8 percent to 4.9 percent.

Standard Bank said in a research note issued before the release of the inflation data that it maintained that the current monetary tightening cycle would be moderate, but it expected another half a percent repo rate hike in October.

This was likely to have a negative impact on bad debts, especially retail debts.

It advised equities investors: "Therefore, we continue to favour a more defensive stance, favouring non-cyclical consumer stocks, banks and rand-hedge stocks."

Sapa

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