SOUTH AFRICA: Rand Stays On Defensive, Global Drivers Outweigh Local PPI Data

South Africa's PPI inflation was +4.6% Y/Y in June, unchanged from May, according to the latest data from Statistics SA, even as consensus was looking for a downtick to +4.5%. At the same time, prices fell 0.3% M/M versus the expected decline of 0.2%.

• Statistics SA wrote that the main contributors to the headline PPI inflation rate were coke, petroleum, chemical, rubber and plastic products (contributed 1.6pp); food products, beverages and tobacco products (contributed 1.2pp) and percentage points); and metals, machinery, equipment and computing equipment (contributed 0.8pp).
• This comes after CPI inflation moderated to +5.1% Y/Y from +5.2% prior, in line with market expectations. Nedbank commented that "almost all the major subcategories recorded slower annual price increases, including 'food', ‘transport’, 'housing and utilities' and 'miscellaneous goods and services'."
• Spot USD/ZAR (last +0.9% at 18.4978),  has been unfazed by the release of domestic PPI data, but the rand remains under pressure from wider risk sentiment. In addition, some are pointing to the impact of the unwinding of yen-funded carry trades ahead of next week's BoJ monetary policy meeting.
• Softer precious metals also help keep the rand in check, with gold last seen ~$23.6/oz. lower.