By Bhargav Acharya
JOHANNESBURG (Reuters) -South Africa's consumer inflation fell slightly more than expected in March, but analysts said the central bank was unlikely to start cutting interest rates for some months yet.
Headline inflation fell to 5.3% year on year from 5.6% in February, data from the statistics agency showed on Wednesday, compared to 5.4% predicted by analysts polled by Reuters.
The South African Reserve Bank (SARB) has kept its main interest rate unchanged at 8.25% at its past five monetary policy meetings, saying last month that its stance needed to remain restrictive.
It expects headline inflation to reach 4.5%, the midpoint of its target range, only near the end of 2025.
Analysts said the modest fall in inflation in March was not enough to convince the SARB to lower the repo rate.
"Even with inflation set to continue falling, interest rate cuts are likely to begin until well after the election is out of the way," said David Omojomolo, Africa economist at Capital Economics.
"We expect the first interest rate cut to start from September, with 50 bp (basis points) of cuts by the end of the year," he said.
South Africa will hold a general election on May 29, a day before the SARB's next interest rate announcement.
The rand strengthened after Wednesday's inflation data and was last trading at 18.9500 per dollar, 0.5% stronger than its previous close.
Shaun Murison, a senior analyst at IG Markets, said financial markets were reassured that inflation was back on a downward path.
On a month-on-month basis, consumer inflation was at 0.8% in March compared to 1.0% a month before, while core inflation came in at 4.9% from 5.0% in February.