SOUTH AFRICA: Headline Inflation Expected To Slow Marginally, Core Seen Unch.

Statistics SA is scheduled to release June CPI data at 09:00BST/10:00SAST, following last week's on-hold rate decision (vote split: 4-2, two dissenting votes for a 25bp cut) from the SARB. The central bank admitted that the inflation outlook improved somewhat, but changed its risk assessment and again sees them as tilted to the upside. The SARB's communications have clearly pointed to the intention to bring inflation sustainably to the +4.5% Y/Y target mid-point, while Governor Kganyago has flagged his preference for a lower inflation target, possibly as low as +3.0% Y/Y. The median estimate for headline inflation in Bloomberg's survey is +5.1% Y/Y versus +5.2% recorded in May. Core inflation is expected to have stayed unchanged at +4.6% Y/Y.

• The Bureau for Economic Research expect to see a downtick in headline inflation rate to +5.1% Y/Y, with core unchanged at +4.6%. They think that "price pressure is set to slow further during the second half of the year, with CPI expected to average around 4.8% for the full year – down from 6% in 2023." They expect CPI inflation to reach the mid-point of the SARB's target by the end of Q3 and stay below that level through Q4.
• Nedbank expect inflation to print at +5.1% Y/Y, with M/M inflation slowing to +0.1% from +0.2% on the back of a decrease in fuel prices. However, they note that the "moderation in CPI will partly be contained by the adjustments in housing and utilities prices, domestic workers’ wages, public transport fares, and motor vehicle insurance, which were surveyed in June." In addition, "the rate of moderation in food prices probably continued to slow as the base effects on some food components have dissipated."