for february 2016, mainly as a result of an acceleration in food price inflation. following sharp increases in agricultural food prices in earlier months as a result of the severe drought conditions, food price inflation increased markedly by 1, 8 percentage points to 8, 8 percent in february 2016 – the highest level since august 2014. food price inflation at the producer level registered 9, 0 percent in february, significantly up from the 7, 8 percent recorded in january. agricultural food prices on the other hand has also followed a similar trend, increasing by 27, 2 percent in february as compared to 25, 9 percent in january 2016. these increases are expected to impact consumer prices with a lag. in addition, current indications are not encouraging for the expected agricultural output for the coming season. according to the most recent estimates ( february 2016 ), the agricultural land or area under cultivation will be approximately 26 percent smaller than last year. further, maize which has an important direct and indirect impact on overall food inflation will have to be imported in the coming year in order to meet the annual domestic and commercial consumption of roughly 9, 6 million tons. the sarb forecasts as at the march mpc meeting – which did not consider the february inflation numbers – showed that annual cpi food price inflation was expected to peak at 11, 6 percent in the final quarter of 2016 as compared to the forecast of 11, 3 percent at the beginning of 2016. food price pressures, which have intensified in recent months pose a significant upside risk to inflation. bis central bankers ’ speeches inflation is now expected to average 6, 6 percent and 6, 4 percent in 2016 and 2017, compared to the 6, 8 percent and 7, 0 percent forecasted at the beginning of the year. it is expected to peak at 7, 3 percent in the fourth quarter of 2016 and only return to within the target range during the fourth quarter of 2017. this represents a protracted breach implying that underlying pressures remain elevated. let me now turn to a discussion of some of the underlying inflationary pressures in the economy. the sarb ’ s forecast shows that core inflation will breach the upper end of the target range in the second quarter of 2016 for four consecutive quarters, with a peak at 6, 5 percent in the latter half of 2016. core inflation is expected to average 6, 2 percent in 2016, and 5, 7 percent and 5, 2 percent in the next two years, respectively. average inflation expectations have remained undesirably close to the upper target

advanced countries ( aes ) is notably weaker and the same can also be said for the emerging market economies ( emes ), with the exception of emerging asia. for some time, the global recovery has been underpinned by the performance in emerging markets with the expectation that the global growth momentum will gain traction as the pace of recovery in advanced countries picked up. unfortunately, these expectations have not been fully realised. emerging market economies, which currently make up around 58 percent of global gross domestic product ( gdp ), still continue to account for a significant portion of world growth. however, the economic performance across emerging markets as a whole is uneven and generally weaker. with the exception of india, most major emerging market economies have had disappointing growth outcomes as depicted by the recent recessions in brazil and russia and the slowdown in china. bis central bankers ’ speeches of concern, is that the global recovery is not only weaker, but that the deterioration in the global environment over the last year has been accompanied by greater downside risks. the drop in commodity prices, uncertainty in financial markets, volatile capital flows, subdued external demand and geopolitical influences, coupled with the refugee crisis, have been some of the major headwinds adversely impacting global economic developments. unfortunately, these factors will continue to have a bearing on the economic outlook for both emerging market economies and the global economy as a whole. given the globalised nature of emes – south africa included – this implies that international influences, although of an exogenous nature, will form an integral part of the policy landscape in emerging economies. global inflation pressures remain subdued with both current and projected inflation rates below target in most advanced economies. these developments, combined with below potential growth have prompted expansionary monetary policies in a number of advanced economies, which are very likely to persist over the forecast horizon. in contrast, inflationary pressures have been rising in a number of emerging economies, mainly on account of currency depreciation rather than as a result of rising international price pressures. south african inflation outcomes have also been subjected to more prominent exchange rate pressures recently, an issue i will come back to later on. so in general, global inflation remains at modest and subdued levels and, with oil prices projected to remain at low levels, international cost pressures are unlikely to pose a major risk to inflation outcomes across the globe. south africa ’ s economic outcomes and outlook recent indicators show that real economic growth in south africa slowed marginally to an annualised rate of 0