CAPE TOWN: Economists forecast to 4.7 percent in June, prompting investors to pare bets of an interest rate increase tomorrow.
Inflation accelerated from 4.6 percent in May, the Pretoria-based statistics office said on its website on Wednesday. The median estimate of 24 economists surveyed by Bloomberg was 5 percent. Prices rose 0.4 percent in the month.
Analysts are divided on whether the Reserve Bank will increase its benchmark rate for the first time in a year from 5.75 percent on Thursday. While a weaker rand and rising electricity costs are putting pressure on inflation, the economy is struggling to recover from the slowest expansion since the 2009 recession.
“The data makes the market a bit more uncertain about the expectations for a rate hike tomorrow and I think it’s a justified analysis,” Jana van Deventer, an economist at ETM Analytics, said by phone from Johannesburg. “We think the Reserve Bank will keep rates unchanged tomorrow.”
Forward rate agreements starting in one month, used to speculate on rates, fell 5 basis points to a four-week low of 6.25 percent as of 10:54 am in Johannesburg. That shows traders are pricing in a 36 percent probability of a 25 basis- point increase tomorrow. The rand fell 0.4 percent to 12.3776 against the dollar, taking its decline this year to 6.5 percent.
