…As UK’s CPI Eases To 2.6% In June
South Africa’s headline inflation rose sharply than expected in June, bolstering expectations that the country’s central bank will hike its interest rate for the second consecutive time at the end of its meeting on Thursday.
The latest headline consumer inflation published by Statistics South Africa on Wednesday showed that headline inflation surge to a two-year high of 5.0% in June from 4.5% in May.
According to the agency, the transport category was the largest contributor to both the annual and monthly increases in the Consumer Price Index (CPI), as the US-Iran conflict to disrupt crude oil supply globally, accentuating fuel prices hike in the global markets.
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The annual core inflation, which didn’t cover volatile items like food and energy, also rose 4.1% in the month under review higher than analysts’ projections.
The South African Reserve Bank has targeted 3% inflation based on its monetary policy thrusts and is bound to announce its next interest rate decision today.
The apex bank in May raised its inflation forecasts for 2026 and 2027 to 4.4% and 3.7%, respectively, from previous estimates of 3.7% and 3.3%.
Meanwhile, Britain’s headline inflation eased than expected in June, rising by 2.6% in annual terms, the weakest increase since March 2025 and down from 2.8% in May this year.
Reuters reported in June a brief de-escalation in the Iran war reduced fuel prices, noting that the slowdown is likely to offer only temporary relief to new Prime Minister, Andy Burnham, as he seeks to moderate living costs.
According to the online medium, Britain’s headline inflation rate, which has been the highest in the Group of Seven for much of the past few years, was lower in June than in the United States and the Euro zone where it stood at 3.5% and 2.8% respectively.
The CPI data published by the Office for National Statistics (ONS) showed that motor fuel prices fell in month-on-month terms for the first time since the war’s late February start just as manufacturers’ input costs fell by 2.0% from the preceding month’s rate.
The Bank of England, which has a 2% inflation target, said inflation would likely to rise to 3% in the third quarter.
Prices for food, which the BoE hinged its inflation forecast on were 1.6% higher in June compared with a year earlier, down from a 2.1% rise in May.
Economists polled by Reuters had mostly expected a smaller drop to 2.7%. However, the conflict in the Gulf has reignited this month, pushing up energy costs, and analysts said the June inflation reading was likely to prove a low point for the year.
The online medium quoted chief economic adviser to the ITEM Club, Matt Swannell, as saying that a recent increase in wholesale energy prices will more than offset the domestic power bill tax cut, and inflation could climb towards 3.5% by the end of 2026.
As expected, Reuters reported that Britain’s new finance minister, John Healey, welcomed Wednesday’s data but said the government needed to do more to help households.
Also, chief economist at ICAEW, Suren Thiru, said the expected rise in inflation in the coming months would squeeze the government’s fiscal headroom and raise borrowing costs and increase financial market volatility.
