Pretoria, Oct 29 (IANS) The Consumer Price Index (CPI) which is used to measure inflation fell in South Africa to 6.1 percent in September, Statistics South Africa (Stats SA) has announced.

This rate was 0.3 percent lower than the annual 6.4 percent rate recorded in August.

'On average, prices increased by 0.4 percent between August 2009 and September 2009,' said Stats SA Wednesday, while indicating that the food and non-alcoholic beverages index increased by 0.1 percent between August and September 2009.

The index's annual rate decreased to 5.6 percent in September 2009 from 6.8 percent in August 2009.

Stats SA said the monthly increase in the food and non-alcoholic beverages index was largely driven by increase in the prices of vegetables, other food, fruit, sugar, sweets and desserts as well as milk, eggs and cheese, Bua News reported.

However, these were counteracted by monthly price decrease of meat, bread and cereals, hot beverages as well as oils and fats.

The housing and utilities index increased by 0.6 percent between August 2009 and September, while the household contents and services index increased by 0.1 percent during the same period.

The transport index annual rate increased to -1.3 percent in September 2009 from -2.7 percent in August 2009.

Danelee van Dyk, a standard Bank economist, said the figure was surprising as they had expected a 6.4 percent decline.

She said the decline could be ascribed to the strength of the Rand benefitting prices of imported consumer goods such as furniture.

This view was also shared by Nedbank economist Isaac Matshego.

'It was below market expectation... in terms of interest rates it does not change the story, the Reserve Bank said it expected inflation to keep going down and reach the target range in the second quarter of 2010,' he said.

He added that the bank still saw room for another rate cut.

The figure could be seen in terms of lower food prices as well as the strength of the Rand, said Matshego, adding that the demand conditions are still very weak.

'Demand conditions are still very weak and the December shopping period could be weaker than expected,' he said.