South Africa's trade deficit widened sharply in September after a surge in oil imports, data showed on Monday, further increasing the chances of an early interest rate hike.
The trade balance recorded a shortfall of 3.7 billion rand from 3.24 billion rand in August, the South African Revenue Service said. Analysts polled by Reuters had forecast a gap of 1.5 billion rand but the figures are notoriously volatile.
"It's not good news for us in terms of interest rates, this could certainly tip the balance for an increase ... the current account deficit and demand for credit is becoming a problem," said Dawie Roodt, an economist at Efficient Research. Fears of a rate hike by February next year are mounting following hawkish comments recently by Reserve Bank governor Tito Mboweni about the inflationary risk from high oil prices.
The bank left its key repo rate unchanged at 7 percent last month after slashing it by 6.5 percentage points between June 2003 and April this year. That has pushed the prime lending rate down to 10.50 percent, its lowest level in over two decades, sparking a spending boom.
Imports rose by 3.27 percent, driven mainly by a 2.3 billion rand increase in mineral product which includes oil. Compared to the previous month, exports rose by 2.08 percent, lifted by increases in vehicle, mineral and chemical exports.
The government has forecast a current account deficit of 3.5 percent of gross domestic product (GDP) this year, up from 3.2 percent in 2004. The cumulative deficit for the first 9 months of the year was around 15.9 billion rand versus a shortfall of 7.8 billion rand over the same period last year.