Reuters

CREDIT demand from the private sector surged in March, official data showed on Friday, climbing at a pace which made an interest rate hike look more likely, and knocking prices for government bonds.

Consumer demand has been driving faster growth in the continent’s biggest economy, but has also pushed household debt up to record levels and helped widen the country’s trade deficit to alarming levels.

Private sector credit demand jumped by 24,31 percent in the year to March, quickening from an unrevised 21,54% in February and surpassing forecasts of a 22,35% increase, figures from the Reserve Bank showed on Friday.

During the same period the broadly defined M3 measure of money supply grew by 26,83% - also well above forecasts - after increasing by 21,54% in February.

"These numbers are horrendously high, all the credit categories rose strongly and it is clear we are dealing with an extremely confident consumer," said Nedbank economist Nicky Weimar.

"From an interest rate perspective this increases the risk of an interest rate hike ... however I wouldn’t jump to conclusions, it all depends on inflation and the inflation picture is moderate at the moment."

During the past few weeks, the central bank has repeatedly warned that the bias for monetary policy was upwards, given increased inflation risks from record global oil prices and the strength of domestic consumption.

Government bond yields, which move in the opposite direction to prices, dipped on the news.

Yields on the government’s benchmark R157 bond due 2015 rose by five basis points to 7,485%, while the yield on the most-traded R153 bond due 2010 rose by three basis points to 7,24%.