Inflation slowed marginally in May defying economists’ expectations. Data released by Statistics South Africa shows the Consumer Price Inflation (CPI) slowed to an annual 4.4% in May from 4.5% in April.
Economists had expected a hike to 4.6% following the 82 cent petrol price increase this month and weaker rand.
The Consumer Price Inflation easing to a moderate 4.4% has come as a surprise.
Inflation was forecast to increase by 4.6% year on year.
Economists say the annual food prices inflation has moderated to a seven and half year low of 3%, with the most notable moderation coming from pork following the listeriosis outbreak.
But, Economist Elize Kruger says she expects inflation to continue in an upward trend for rest of the year.
The economy is expected to be driven by higher fuel prices, with rand remaining under pressure on the looming trade war between the US and China.
The effects of the 1% VAT hike which took effect in April has sparked talks of a possible rate hike by the reserve bank.
However, Kruger says a rate hike is unlikely given the recent contraction in the economy.