By Africa Bazaar Staff Writer | MARKETS

JOHANNESBURG—South Africa’s annual inflation accelerated to a one-year high in June, driven by surging fuel prices that lifted transport costs across the economy, according to the latest data released on Tuesday, placing the country’s central bank under renewed scrutiny as policymakers prepare to announce their latest interest rate decision on Thursday.

Consumer prices rose 5.0% from a year earlier in June, up from 4.5% in May and the highest reading since June 2024, according to Statistics South Africa. On a monthly basis, prices increased 0.7%, matching May’s pace.

The inflation data comes just days before the South African Reserve Bank releases its latest monetary policy statement and interest rate decision. While inflation remains within the bank’s 3% to 6% target range, the renewed acceleration is likely to reinforce policymakers’ cautious stance as they weigh persistent energy-driven price pressures against a slowing global economy.

Transport was the single largest contributor to both annual and monthly inflation, underscoring how higher energy costs continue to ripple through the economy.

Transport inflation accelerated to 12.7% in June from 9.4% in May after fuel prices surged 34.3% over the past year. Diesel prices jumped 50.8%, while petrol climbed 31.7%, increasing costs for businesses, commuters, and logistics operators.

The fuel shock quickly spilled over into passenger transportation. Passenger transport inflation climbed to 12.5% annually from 4.0% in May after rising 8.1% during the month. Minibus taxi fares increased 11.5%, e-hailing services rose 8.7%, and long-distance bus fares climbed 8.4%, illustrating how higher fuel costs are filtering through consumer spending.

Food prices, by contrast, continued to provide some relief as food and non-alcoholic beverages inflation slowed to 1.6% in June from 1.9% in May and 2.9% in April, extending a recent moderation in grocery prices.

Staple foods remained cheaper than a year earlier. Cereal products posted a fifth consecutive month of deflation, with white rice prices falling 13.4%, maize meal down 5.9%, and porridge declining 1.3%. Meat inflation also continued to cool, easing to 5.1% after reaching 13.5% in January. Beef prices moderated sharply, with beef mince inflation slowing to 3.9% from 10.6% in May, while stewing beef entered deflation, falling 2.7% from a year earlier.

Some protein categories remained elevated. Pork inflation eased for a third consecutive month but remained high at 13.9%, while mutton and lamb prices accelerated 8.4%. Processed meat products also continued to record strong price gains, including sausages (11.8%), corned meat (10.2%) and bacon (8.6%).

Consumers also continued to pay more for beverages. Inflation for hot drinks remained above 6% for a fourth straight year, reaching 7.4% in June. Black tea prices increased 8.3%, while instant coffee rose 7.0%.

Housing costs edged higher as well. Actual rents increased 1.1% from the March quarter, lifting annual rental inflation to 4.1%. Townhouses recorded the strongest annual rental increases at 5.4%, followed by flats (4.6%) and houses (3.7%).

The mixed inflation picture suggests South Africa’s price pressures are becoming increasingly concentrated in energy and transportation rather than broad-based consumer goods—a distinction that could prove significant for the Reserve Bank as it assesses whether inflation risks are becoming entrenched.

Separate retail data released also showed South African consumers continued to spend despite rising living costs. Retail sales increased 2.3% in May from a year earlier, with five of the seven major retail categories posting gains.

The strongest growth came from miscellaneous retailers—including online merchants, jewelry stores, stationery and sporting goods—as well as textile and clothing retailers. Household furniture and appliance stores, pharmacies and medical goods retailers, and general dealers also reported stronger sales.

On the other hand, weakness remained concentrated in hardware, paint and glass retailers, while food and beverage stores posted their sixth consecutive month of annual sales declines, suggesting consumers continue to shift spending toward discretionary purchases while remaining cautious about everyday household expenditures.

On a seasonally adjusted basis, retail sales edged up 0.1% in May from April, following a 0.8% increase the previous month.

The resurgence in fuel-driven inflation is likely to dominate attention as the South African Reserve Bank announces its monetary policy decision and updates its outlook for inflation, growth and interest rates later Thursday