Higher oil prices might not filter through to inflation as the South African Reserve Bank prepares to meet next week.
The South African Reserve Bank (SARB) is expected to leave interest rates unchanged next week, but economists say the decision is likely to be one of the closest in months as higher oil prices and renewed conflict in the Middle East complicate an otherwise improving inflation outlook.
The Monetary Policy Committee's decision on Thursday follows the release of June consumer inflation data a day earlier. Economists expect annual inflation to edge up from 4.5% in May to between 4.6% and 4.7%, largely because of higher fuel prices.
Johann Els, chief economist at PSG, said the June inflation figure itself was unlikely to influence the committee's decision because SARB would already have finalised its own inflation forecasts before the official data is released.
However, Els said the renewed conflict in the Middle East had pushed oil prices back to about $85 a barrel, making next week's decision "a very close call" despite his base case remaining that rates will be left unchanged.
