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Higher oil prices a problem for S.Africa-cenbank

CAPE TOWN: Higher oil prices are starting to push South African inflation up, but the economy is still expected to perform well in 2000, South Africa's central bank governor Tito Mboweni said on Tuesday.

"The rise in the oil price is bound to have secondary consequences for ourselves. We already see second round effects beginning to show in the producer price index ticking upwards and that is a problem," Mboweni told businessmen at a breakfast meeting in Cape Town. He said that a rise in the bank's main inflation measure, the CPI-X index to 7.1 percent in the year to February from 7.0 percent the previous month was an issue of concern.

"But nevertheless, we must not lose sight of the good prospects that are there in the economy. We are very excited that things are going to move very smoothly in South Africa during the course of this year," he said.

The government has set an inflation target of six to three percent for the end of 2001, with the CPI-X index for both urban and metropolitan areas expected to be the targetted measure.

That index strips out the effect of changes in mortgage bonds.-Reuters