Consumer price inflation, after dipping to a multi-year low of 3.2% year on year in September, is on the rise again. It climbed to 3.4% in October and 3.6% in November, spurred by costlier oil and electricity, although the strong rand is helping to relieve the pressure by keeping import prices down. The main inflationary drivers at present are administered prices (especially for electricity), which were 9.8% higher in November, and world oil-and local fuel-prices. This upward pressure will continue following an increase in global oil prices to over US$90/barrel in December for the first time in more than a year. Food price inflation currently remains subdued (at just 1.3% in November), helped by a good domestic harvest, but the sharp rise in global prices for many commodities (because of unfavourable weather) poses some risk. The main inflationary danger comes from a potential slide in the rand, although the currency remains robust at present. The rand averaged R6.83:US$1 in December, a three-year peak and 8.8% stronger than a year earlier, and remained at close to this level in the first week of 2011.

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