S.Africa's CPI at 4-year low on food inflation

By Phumza Macanda

JOHANNESBURG (Reuters) - South African consumer price inflation slowed more than expected to a four-year low in April as food price pressure eased, possibly boosting chances of another interest rate cut.

Statistics South Africa said on Wednesday annual inflation slowed to 4.8 percent in April, compared with March's 5.1 percent and undershooting the 5.0 percent forecast in a Reuters poll.

Inflation has slowed sharply since peaking at close to 14 percent in 2008. Food price inflation, the main driver at the time, has trended downwards, braking to 0.9 percent on an annual basis in April, compared to 1.3 percent in March.

Razia Khan, head of Africa research at Standard Chartered, said the favourable inflation print gave the central bank room to cut interest rates further, should it wish to do so.

"Coupled with recent SARB comments about how they are watching global developments closely, this does leave the door open to further interest rate easing if the SARB should see it as necessary," she said.

"For now though, the expectation is that the repo will be kept on hold."

ON ALERT

The Reserve Bank reduced its repo rate by 550 basis points to 6.5 percent between December 2008 and March this year, initially to pull the economy out of its first recession in 17 years and then as inflation continued to cool.