Inflation skyrockets to 5.0% in South Africa
Consumer Price inflation skyrocketed to 5.0% in June 2026, and the South African Reserve Bank (SARB) is likely to raise interest rates this week.
Stats SA said that annual consumer price inflation was 5.0% in June 2026, up from 4.5% in May 2026. CPI increased by 0.7% month-on-month in June 2026.
Stats SA said the main contributor to the increases was transport, up 12.7% year-on-year, accounting for 1.7 percentage points.
Petrol and fuel prices rose rapidly following the United States attacks on Iran and the subsequent closure of the Strait of Hormuz, where around 30% of the world’s oil flows.
While Iran and the United States signed a peace agreement last month, it has already been broken, heightening uncertainty about what will happen in the region.
Housing and utilities (up 5.5% and contributing 1.3 percentage points) and insurance and financial services (5.9% and contributing 0.6 of a percentage point) were also high in June.
The latest inflation expectations were above estimates of around 4.7% for the month and sit well above the SARB’s 3% target range.
The Monetary Policy Committee (MPC) of the SARB meets tomorrow, with economists largely expecting a 25 basis point hike.
While the MPC bases its interest rate expectations on where inflation is expected to be, analysts expect inflation to hover around 4% in 2026.
The likely 25 basis point hike will bring the repo rate to 7.25% and the prime rate to 11.75%.
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