WATCH: SARB holds rates even as inflation spikes

South African Reserve Bank Governor Governor Lesetja Kganyago.

The South African Reserve Bank's Monetary Policy Committee (MPC) at 10.5% on Thursday, after the cost of living accelerated more sharply than expected in June, with the risk of another hike dependent on the Middle East war.

Consumer inflation rose to 5% year-on-year in June, from 4.5% in May, driven largely by higher transport costs following fuel price increases linked to the conflict in the Middle East.

The reading was above market expectations and pushed inflation further past the upper end of the South African Reserve Bank's 3% - with a one percentage point band either side – target range.

Governor Lesetja Kganyago said the bank expected inflation to increase while economic growth would likely slow. “We see upside risks to inflation.”