By Bhargav Acharya and Tannur Anders

JOHANNESBURG Inflation in South Africa rose sharply in September but stayed within the central bank's target range, fuelling analysts' expectations that interest rates would be left unchanged next month.

Statistics South Africa said headline consumer inflation rose to 5.4% year-on-year in September from 4.8% in August, with food, fuel and transport sectors being the biggest contributors.

Core inflation, which excludes food and fuel costs, fell to 4.5% year-on-year in September from 4.8% in August.

The South African Reserve Bank (SARB) targets inflation between 3% and 6% and prefers to see it around the midpoint of that range.

Economist Elize Kruger said headline inflation was likely to remain above 5% until around the third quarter of 2024 but that the current level of interest rates was sufficiently restrictive.

"The SARB will keep rates unchanged at this level for a pro-longed period, before a first cut in interest rates would be considered," she said.

Kruger also cautioned that the impact of a poultry crisis in the country on food inflation would only be seen in the October print.

South Africa is currently dealing with its worst outbreak of avian flu, which has hit egg and chicken meat supplies. Millions of chickens have been culled while many grocery retailers are limiting the number of eggs shoppers can buy.

The SARB warned on Tuesday that upside risks to inflation had strengthened over the past months, heightening uncertainty about a precise path for inflation.

Investec economist Annabel Bishop said inflation was expected to average 5.8% this year and 4.6% the next, while the rand currency and fuel prices posed risks to its outlook.

The central bank kept rates on hold in its previous two policy meetings after 10 consecutive hikes to curb inflation.

"There are likely to be no further hikes in South Africa's interest rate cycle," Bishop said.

(Reporting by Bhargav Acharya and Tannur Anders; Editing by Olivia Kumwenda-Mtambo, Alexandra Hudson)