CAPE TOWN: South African inflation quickened for the first time in four months in June, complicating the task of the Reserve Bank as it deliberates before announcing its rates decision on Thursday.
The inflation rate rose to 6.3 percent from 6.1 percent a month earlier, Pretoria-based Statistics South Africa said on its website on Wednesday. The acceleration was in line with the median of 23 economist estimates compiled by Bloomberg. Prices rose 0.6 percent in the month.
Price growth has exceeded the central bank’s 3 percent to 6 percent target band since the start of the year as the worst drought in more than a century and a weaker currency put pressure on consumer prices. Inflation expectations, as measured by the five-year breakeven rate, declined in the past two months as the rand gained against the dollar, leaving some room for the Reserve Bank to support an economy that will probably expand at 0.1 percent this year, according to International Monetary Fund estimates.
The central bank has increased its benchmark repurchase rate by 125 basis points to 7 percent since last July. All 24 economists in a Bloomberg survey say the Monetary Policy Committee will keep borrowing costs unchanged this week. Forward-rate agreements are pricing in an about 10 percent chance of a quarter percentage point increase.
