South African Inflation Slows as Food and Transport Costs Cool
South Africa’s inflation rate slowed slightly in June, touching a six-month low and potentially encouraging the central bank to consider cutting interest rates later this year.
Consumer prices rose 5.1% in June from a year earlier, compared with 5.2% in the prior month, Pretoria-based Statistics South Africa said Wednesday in a statement on its website. That matched the median of 16 economists’ estimates in a Bloomberg survey.
The data bolsters the reserve bank’s improved inflation outlook, which now sees prices slowing below the 4.5% midpoint of its target range in the fourth quarter. Officials have repeatedly stressed they won’t adjust policy until that goal is reached, but some of them have softened their hawkish stance.
The central bank’s six-member policy committee last week voted to leave interest rates at 8.25% but the decision was split, fanning hopes it was becoming more open to easing. Two wanted to cut rates by 25 basis points while four officials favored a hold, with Governor Lesetja Kganyago arguing there needs to be a sustained decline for officials to be confident inflation is under control.
Contributing to the change was a 4.6% rise in the food and non-alcoholic beverages category, which was the slowest gain since September 2020. Transport costs rose by 5.5% last month, down from 6.3% in May.
