Johannesburg - South Africa's headline inflation pulled further away from the central bank's target range in June, data showed on Wednesday, but analysts said the increase was probably not enough to justify an interest rate hike this week.
While pursuing its mandate of containing inflation, the Reserve Bank is wary of adding further strain on an economy which contracted in the first quarter and is expected to grow at most by 0.9 percent this year.
Inflation quickened to 6.3 percent year-on-year in June from 6.1 percent in May, data from Statistics South Africa showed. Economists polled by Reuters had expected a 6.2 percent increase.
Analysts, who expect the central bank to keep its repo rate on hold at 7 percent on Thursday, said the latest inflation print did not change that view.
“I don't think it's going to have any impact at all. We thought by now inflation would probably be near 7 percent,” Eskom chief economist Mandla Maleka said.
“We can live with 6.3,” he said, predicting a rate hike only in November.
The rand edged up slightly against the dollar after Wednesday's data, suggesting some traders believed there was a slightly higher chance of a rate hike this week.
Statistics South Africa said prices were up 0.6 percent on a month-on-month basis in June, after a 0.2 percent increase in the previous month.
Core inflation, which excludes the prices of food, non-alcoholic beverages, petrol and energy, rose slightly to 5.6 percent year-on-year in June from 5.5 percent, and to 0.4 percent month-on-month from 0.2 percent.
REUTERS