The inflation rate has exceeded the midpoint of the central bank’s target range of three per cent to six per cent for the first time since December.
South African consumer prices climbed at the fastest pace this year in June after higher gasoline prices stoked transport costs, limiting room for the central bank to consider cutting its benchmark rate.
In a statement, Statistics South Africa said that annual inflation rate was 4.6 per cent compared with 4.4 per cent in May. The median estimate in a Bloomberg survey was for 4.8 per cent.
The rand had its worst month in more than two years last month as the US and China exchanged tariff blows at a time when the prospect of rising American rates also weighed on emerging-market assets. The weaker currency and higher oil prices added upside risks to inflation in Africa’s most-industrialised economy.
“The SARB isn’t going to be in a rush to raise rates,” said Jeffrey Schultz, an economist at BNP Paribas South Africa in Johannesburg. “We’ve had five months where headline inflation has undershot expectations, and this is likely to neutralize some of the hawkish tones from the central bank.”
The Monetary Policy Committee has made it clear that it also prefers to see expectations for future inflation close to 4.5 per cent.
The bank is likely to hold the rate at 6.5 per cent, according to all 15 economists in a Bloomberg survey.
Core inflation, which excludes the price of food, non-alcoholic beverages, energy and gasoline, was 4.2 per cent in June.