JOHANNESBURG, July 19 (Xinhua) -- South Africa's headline consumer inflation decreased more than expected to 5.1 percent year on year in June from 5.4 percent in May, Statistics South Africa reported on Wednesday.
According to Statistics South Africa, last month's food inflation figures show the significance of meat within the food basket.
"All products decelerated from the previous month's levels with the exception of meat which remained elevated and therefore, sustaining food inflation at 6.9 percent," Wandile Sihlobo, an economist with Agbiz told Xinhua on Wednesday.
"The uptick in meat inflation mirrors the remaining effects of the 2015 to 2016 El Nino induced drought in the livestock sector. As farmers continued to restock their herds, the slaughtering activity eased a bit with that resulting in the increase in meat prices," he added.
"This is the third month in a row that we are back within the inflation target band," TreasuryOne said after the release of the data. "All eyes will be on the South Afican Reserve Bank's monetary policy committee tomorrow (on Thursday) to see if they make a move on interest rates."
Another analyst agreed, "A lower CPI print will make the South African Reserve Bank rate decision difficult tomorrow, especially because growth is weak and the exchange rate is also much stronger than at the last Monetary Policy Committee meeting," Rand Merchant Bank analyst Isaah Mhlanga wrote in a note.
In reaction to the news, the South Africa's rand declined 0.43 percent against the U.S. dollar on Wednesday, trading at R12.95 to the dollar.
South African Reserve Bank is battling to rein in the stubborn inflation to the target of between 3 percent and 6 percent. Economist expects the Reserve Bank monetary policy committee to leave the repo rate unchanged at 7 percent, and the bank's lending rate at 10.5 percent. The change in South Africa's interest rate is often done to keep inflation within this band.
