needed to adapt the financial sector to major internal socio - political reforms, and to accommodate the challenges presented by an enhanced participation in the global financial markets. as far as regional developments are concerned, south africa welcomes the opportunity of participating more actively through the southern african development community in the development of the financial sector of the african continent. there is a growing need for some closer contact between the various regional financial sector arrangements on the african continent. from the level of financial reforms applied within each one of the more than fifty african countries, through the second tier of regional financial cooperation, the ultimate objective must be to establish a sound, stable and well - functioning financial system in support of economic development in the whole of africa. co - ordination on a continental basis of the financial reforms applied within the regions can, perhaps, become an important function of the economic commission for africa, working under the auspices of the economic and social council of the united nations.

fairness and development in the broadest sense would be sacrificed if inflation were left to spiral upward. 4. what is currently happening to inflation, growth and employment? it is by now well - known that the south african government has set a target of 3 to 6 per cent for cpix inflation. in 2002, the actual outcome was 10 per cent. while disappointing, this outcome was not unexpected in the light of the 34 per cent depreciation of the nominal effective exchange rate of the rand during 2001. it fed higher rand prices for imported products into the inflation spiral. in order to brake these inflationary forces, the reserve bank therefore raised its repurchase rate on 4 occasions from january to september 2002, on each occasion by 100 basis points. the 2001 depreciation of the rand was fairly soon reflected in production prices. twelve - month production price inflation accelerated from a low point of 7, 8 per cent in september 2001 to a doubledigit rate of 11, 5 per cent in january 2002 and eventually reached a maximum of 15, 4 per cent in both august and september 2002. consumer prices tend to lag a bit behind production prices, and this is indeed what happened again : twelve - month cpix inflation accelerated from a low point of 5, 8 per cent in september 2001 to double - digit rates from august 2002 and recorded a recent highest level of 12, 7 per cent in november 2002. food prices played an important role in this process. at the production price level twelve - month food price inflation peaked at around 30 per cent, while at the consumer level it peaked at around 20 per cent. for key food items like maize, southern african production fell below demand, driving prices towards import parity - which meant very high levels in rand terms during most of the past 18 months, given what had happened to the exchange rate. but year - on - year inflation rates can be deceptive, making it worthwhile to also analyse shorter - term price movements. one way of doing so is to calculate the percentage change from quarter to quarter in the relevant price index, and then to annualise it. calculated in this way, production price inflation shot up to 25, 8 per cent in the first quarter of 2002, but receded during the course of the year to only 5, 0 per cent in the fourth quarter. consumer prices were much more sticky ; annualised cpix inflation on balance accelerated from 11, 5 per cent in the first quarter of 2002 to 14, 5