Increases in electricity and water tariffs enacted by municipalities last month also took their toll, said Statistics South Africa, in addition to the cost of petrol rising by 84 cents per litre at the beginning of July.
“It was quite a bit higher than we thought it would be, mainly because of the electricity component,” said Peter Attard Montalto, emerging market economist at Nomura.
A depreciating rand and rising wage and salary costs have hit consumers and the economy hard.
The 6.3-percent rate is the above the 6.0-percent upper range of the South African Reserve Bank’s inflation target.
The consumer price index has been above the 4.5-percent mid-point of the central bank’s target inflation rate since June 2011, leaving little room to lower interest rates in order to spur growth.
“The South African consumer I think is suffering generally, there have been exceptionally strong increases in living costs,” said Annabel Bishop, an analyst at Investec.
“Does inflation mean a higher interest rate? I don’t think so, as the inflation is because of petrol price increases,” she said.
Inflation was likely to come down in the fourth quarter due to normal petrol price increases in that period, she said, adding “the reserve bank should be comfortable to leave interest rates unchanged this year.”
South African Reserve Bank governor Gill Marcus said last month the leading BRICS emerging countries of Brazil, Russia, India, China and South Africa, had been hit hard by a deterioration in global growth.
The Reserve Bank lowered its growth forecast to 2.0 in 2013, and 3.3 for the next year. Marcus said there are risks to the forecast, citing electricity supply constraints.
“Although our forecast suggests that inflation will remain within the target range,” said Marcus, “it is uncomfortably close to the top of the target range and the risks to this forecast are seen to be on the upside.”
She made her remarks in a speech on July 26 to shareholders in Pretoria, the administrative capital of South Africa.
South Africa is one of the countries caught up in pressures on emerging economies in recent months.
The common factor recently is a perception that the US central bank is about to begin reducing its easy-money stimulus.
Some of this cheap money had gone into emerging markets, stimulating their growth, but now some of it is flowing out, depressing their currencies, pushing up interest rates on their sovereign debt markets, and highlighting specific weaknesses in the economies of each country.
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