CPI remains unchanged at 5.3%

"This rate was unchanged from July 2011. On average, prices increased by 0.2% between July 2011 and August 2011," said Stats SA.

A Bloomberg survey predicted that the Consumer Price Index (CPI) would rise to 5.5%.

Between July and August, the food and non-alcoholic beverages index increased by 0.3% while the transport index increased by 0.4% due to the 17 cents a litre increase in the petrol price.

Nedbank economists said consumer inflation came out better than expected, adding that the prices of most goods and services remained relatively steady, with the only significant pressure coming from higher transport costs.

Inflation is expected to resume its upward trend in the coming months rising off the low base.

"The earlier surge in global oil and fuel prices and a weaker rand will slowly filter through to consumer prices, pushing inflation up towards the Reserve Bank's upper 6% limit by the end of this year, with a breach expected early next year," said Nedbank.

The data comes as the Reserve Bank's Monetary Policy Committee is in discussion on rates.

The repo rate remained unchanged in July at 5.5%. Governor Gill Marcus is expected to announce the MPC's decision tomorrow.

"The Reserve Bank's Monetary Policy Committee will be torn between concerns over the upward climb in inflation and growing evidence of a slowing local economy against the background of a very uncertain and weak global economy. Although worries over the downside risk to economic growth are likely to dominate, the continued rise in inflation and the expected breach of the target range early next year will make the MPC cautious," said Nedbank.

Both Nedbank and Standard Bank expect the wait-and-see approach of the central bank to continue well into 2012, leaving the current interest rates on hold.

"However, if local and global economic conditions were to weaken further, with recession threatening, another interest rate cut may be on the cards before the year is done," noted Nedbank.