Consumer price inflation (CPI) slowed in November, Statistics South African (Stats SA) said on Tuesday.

CPI eased to 5,8% year-on-year in November from to 5,9% year-on-year in October.

Headline CPI came in at 0,0% on a monthly basis in November.

This was the second month in a row since March 2007 that consumer price inflation stayed within the 3% to 6% target range of the South African Reserve Bank.

"However, it is unlikely to remain below 6% over the next six months owing to base and seasonal effects," Investec Group economist Annabel Bishop said.

She said that December's outcome was expected at 6,2% year-on-year.

"The rand has remained relatively stable around R7,40 to the US dollar and its trade-weighted strength has contributed to the inflation target being attained," Bishop said.

"We believe that the domestic currency will average R7,20 to the US dollar, strengthening further on an effective basis - which will push CPI inflation back within target in March 2010."

Bishop said that food price deflation continued at the global commodities level, which along with weak demand in South Africa, had caused retail price increases to moderate.

However, she expected an increase in food price inflation over the festive season, "but then the downward trend should continue, if not sharpen in the first quarter of 2010".

She said with well over one-million jobs lost in the 2008/9 recession, a downward trend in CPI inflation was only to be expected.

She said that what little inflationary pressure there was emanated from administered prices.

"This situation will only be exacerbated when Eskom institutes its still hefty tariff hike in the middle of next year, should the 35% be approved."

Bishop said she believed that there would be no more interest rate cuts in the current cycle, unless the economy's performance deteriorated significantly.

"With global recovery seemingly underway, this should drive the domestic performance with the demand side and job creation lagging behind."

Bishop said Tuesday's CPI figure did not change her view either in terms of the future path of interest rates or inflation.

"With the demand side of the economy still in recession and only likely to emerge from it in early 2010, there is little chance of any interest rate hikes before the fourth quarter of 2010."

Even this monetary tightening at the end of next year would be heavily dependent on economic performance and might well be delayed until 2011, she added.

With job losses still likely in the fourth quarter of 2009 - and not much job creation in 2010 - any decision to hike rates would be very unpopular.

The move forecast in the fourth quarter of 2010 was based on the belief that monetary policy would be returned to a more neutral stance, should the strengthening economy warrant it.

Bishop said electricity tariff increases of 35% would keep CPI inflation out of target in 2011 from when the tariff hikes were instituted, particularly due to second and third round effects.