(Adds comments from agriculture minister in paragraph 11-12)
JOHANNESBURG, May 20 (Reuters) - South Africa's finance minister on Tuesday defended inflation targeting as an economic management tool and hinted the government was still comfortable with a 3-6 percent target range for the main CPIX gauge.
"I think we would be on the same page with the central bank in saying that ... given the peculiarities of South Africa, a country with low savings, low reserves, as a measure inflation targeting is without equal for now," Manuel told parliament's finance committee.
CPIX consumer inflation has stayed above the 3-6 percent band since April 2007, touching a five-year high of 10.1 percent in the year to March.
The central bank has lifted interest rates by 450 basis points since June 2006, in a bid to bring the measure down.
Last week central bank Governor Tito Mboweni said continuing inflationary pressures left no room to cut South African interest rates, saying if any move were appropriate at present, it would be a rise.
The central bank's monetary policy committee which decides on interest rates next meets on June 11-12.
Some analysts and labour unions have criticised the central bank's interest rate hikes, saying the monetary authorities might be focusing too much on inflation targeting at the expense of economic growth.
"When we set the band we took it on good advice. It was not an accident, it wasn't to impose punishment," Manuel said.
The central bank says fuel and food prices remain the main risks of inflation, and labour unions in South Africa have warned of protests similar to those in other African and Asian countries against rising food prices, urging government intervention.
The unions and leftist allies of the ruling ANC have proposed that a 14 percent value added tax be scrapped for some essential food items to protect the poor.
Addressing reporters following an agricultural group meeting with President Thabo Mbeki, Agriculture Minister Lulama Xingwana said good local maize and international wheat harvests could provide some relief for food inflation in 2009.
"We hope by early 2009 we will realise some relief in terms of food inflation," she said.
Manuel said it would be difficult to use tax measures to deal with the impact of higher food costs.
"One of the difficulties with all the food prices is that it's very hard to design a system ... the big, big problem is to try and deal with this as a tax measure ... It's very unsuccessfully done everywhere," he said. (Reporting by Stella Mapenzauswa, Phumza Macanda and Wendell Roelf)
