Johannesburg - Two of last year's four interest rate hikes could have been unnecessary should it be found that Statistics SA overstated annual consumer inflation by as much as 2 percent, Colen Garrow, an economist at Brait, said yesterday.

The impact of the distortion varies among economists, with many predicting it could shave anything between 1 percent and 3 percent off consumer price inflation excluding mortgages (CPIX) from the second quarter of next year, while others believe it would be much lower than 1 percent.

Stats SA this week delayed the planned release of consumer inflation data amid concerns among economists that the use of outdated rental income in the housing component had been overstating consumer price statistics since the beginning of last year.

The data will now be released on May 30 to give Stats SA time to investigate whether the concerns are valid and what action will be taken should it be found the consumer inflation data were over- or understated.

Garrow cautioned that it would be premature to determine what impact new rental income data would have on inflation until Stats SA had indicated what revision would be necessary.

It could, however, mean that the space would be created for four interest rate cuts of 1 percentage point each between now and the first quarter of next year, he said.

Rudolf Gouws, the chief economist at Rand Merchant Bank, did not think an adjustment to the rentals would have given the Reserve Bank space to ease monetary policy last year.

Investec Asset Management portfolio manager John Stopford, who has been credited for spotting the possible error, said wrong data could have resulted in the inflation expectations of South Africans being overstated, higher interest rates for a longer period than necessary, and the overpayment of debt.

The release of the data ahead of the Reserve Bank's monetary policy committee meeting on June 11 and 12 would heighten pressure on the central bank to ease interest rates, he said.

Dawie Roodt, the chief economist at PLJ Financial Services, said incorrect inflation data could potentially have a huge impact as they were one of the most important economic indicators. - Vernon Wessels