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(Bloomberg) -- South Africa’s inflation rate dipped to a two-month low in March, but that is unlikely to persuade policymakers to cut borrowing costs as the drop is expected to be short-lived because of rising oil prices.

Consumer prices rose 5.3% from a year earlier, compared with 5.6% in February, Pretoria-based Statistics South Africa said Wednesday in a statement on its website. The median of 18 economist estimates in a Bloomberg survey was 5.4%.

The rand, which has declined 3.2% against the dollar this year, fluctuated between gains and losses before and after the release of the data. The currency’s slump — along with drought conditions that are forcing up the price of the staple white corn, and a rise in oil prices triggered by geopolitical tensions in the Middle East — is likely to keep inflation sticky, making policymakers reluctant to lower credit costs.

What Bloomberg Economics Says...

“South Africa’s smaller price gains in March is transient. Annual inflation will likely pick up in the second quarter, partly driven by stronger energy prices. It will remain sticky until year end, eluding the mid-point of the South African Reserve Bank’s 3-6% target — where the SARB would like to see inflation anchored — delaying rate cuts until 2025.”

— Yvonne Mhango, Africa economist

South African Reserve Bank Governor Lesetja Kganyago reiterated on Tuesday that he remains wary of inflation pressures and is ready to maintain tight monetary policy to ensure they are contained.

The inflation rate has been above the 4.5% midpoint of the central bank’s target range, where it prefers to peg expectations, since May 2021. The monetary policy committee has left the benchmark interest rate at 8.25% since May, after 10 successive hikes, in a bid to return it to that level.

Forward-rate agreements, used to speculate on borrowing costs, show traders pricing in a less than 10% chance of an interest rate hike at the MPC’s May 28-30 meeting. The yield on 10-year notes fell six basis points from Tuesday’s close to 12.48% after the data was released.

March’s inflation was largely driven by higher miscellaneous goods & services, education, health and housing & utilities costs. Core inflation, which excludes food and energy costs, was 4.9%, from 5% in February.

The statistics agency surveys education once a year in March.

--With assistance from Simbarashe Gumbo and Rene Vollgraaff.

(Updates with comments in paragraph four)