South African Reserve Bank governor Lesetja Kganyago. The Sarb already warned in March that the ongoing Middle East conflict is a clear instance of a supply shock, which raises prices while weakening demand.
South African consumers could face a double blow in June as economists predict the South African Reserve Bank (Sarb) to raise interest and the government will end the R3-per-litre fuel levy relief.
The recent relief has helped motorists cope with rising global oil prices. The Sarb's Monetary Policy Committee (MPC) is likely to take a hawkish stance on Thursday after inflation rose from 3.1% in March to 4.0% in April, mainly due to increasing fuel costs linked to the ongoing Middle East conflict.
Several economists now warn that inflation could climb closer to 5% in the coming months, increasing pressure on the Sarb to act pre-emptively to prevent higher prices from becoming entrenched in the economy.
The Sarb already warned in March that the ongoing Middle East conflict was a clear instance of a supply shock, which raises prices while weakening demand. The central bank said waiting for clear evidence risks leaving the policy response too late.
