Staff Writer 
By Bonolo Mokonoto and Ntando Thukwana, Bloomberg
South Africa’s annual inflation rate jumped to its highest level in almost two years in May, driven by surging energy prices fanned by the US-Israeli war with Iran.
Consumer prices rose 4.5% compared with 4% in April, Pretoria-based Statistics South Africa said in a statement on its website on Wednesday. The outcome was below the median estimate of 4.7% in a Bloomberg survey of 18 economists.
Core inflation, closely watched by the central bank for signs of second-round price pressures, accelerated to 3.8% from 3.6% in the previous month.
The bank targets inflation at 3% with a percentage point tolerance band on either side.
Despite the pickup in inflation, falling energy prices fuelled by an interim US-Iran deal to reopen the Strait of Hormuz may give policymakers room to keep the benchmark rate unchanged in July after raising it to 7% from 6.75% last month. The waterway handled about a fifth of global seaborne oil trade and a third of fertiliser shipments before the blockade.
Governor Lesetja Kganyago earlier this month declined to signal the path of future borrowing costs, saying policymakers would continue to assess incoming data.
“I cannot tell you now if more” rate hikes will be needed, “or how much,” he said. “We take our decisions meeting by meeting. But the policy objective should be crystal clear. We are committed to low and stable inflation.”
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