The consumer price index (CPI) inflation accelerated further to 6.8 percent year-on-year in December 2016 against market expectations of a moderation to 6.5 percent year-on-year, Statistics South Africa (StatsSA) said on Wednesday.

This rate was 0.2 of a percentage point higher than the corresponding annual rate of 6.6 percent in November, and 0.4 of a percentage point from 6.4 percent year-on-year in October.

The CPI inflation averaged 6.6 percent year-on-year in the fourth quarter and 6.3 percent year-on-year in 2016.

StatsSA said the largest contribution, of 1.8 percent, to the headline annual CPI outcome stemmed from the food and non-alcoholic beverages component.

Food price growth in particular, lifted to 12 percent year-on-year in December, from 11.8 percent year-on-year in November.

StatsSA said food price dynamics continued to reflect the lingering effects of the 2015/16 drought.

However, more favourable weather conditions have improved the outlook for the 2017 maize harvest, with GrainSA predicting a potential surplus.

Consequently, maize prices had since declined from peaks reached in January 2016, in the region of 30 percent and 21 percent for white and yellow maize respectively.

StatsSA said the decline in maize prices was expected to aid a deceleration in overall food price inflation over the course of the year.

Additionally, the lagged effects of currency appreciation in 2016 should also serve to dampen inflationary pressures.

The South African Reserve Bank expects CPI inflation to return to the three to six percent target range, on a sustainable basis, during the second quarter of this year.