Business Day speculates that a 1 % rate hike is on the cards follow high inflation figures.

” ANOTHER big week is pending for local economic data, as the numbers due for release are set to paint a picture of the inflation outlook and the direction of interest rates.

The consensus seems to be that the Reserve Bank will tighten monetary policy further, as the markets are pricing in another 100-basis-point hike, following two 50-basis-point hikes in June and this month.

The Bank’s annual economic report, released last week, showed that household consumption expenditure rose to 7,25% in the first half of this year, from 7% in the whole of last year.

The figure raises the possibility of further rate hikes, although it may be too early to tell, as the rate hikes conducted so far this year have yet to work through the system.

Household consumption expenditure is likely to slow in the second half of this year, according to analysts, along with the waning benign environment of low interest rates and inflation.

July consumer inflation data will be released by Statistics SA on Wednesday.

There has been a steady rise in inflation over the past few months, as petrol and food prices continued to climb.

With a weaker rand added to the equation, removing the cushion that previously absorbed higher imported prices, SA’s inflation outlook has turned bearish of late.

CPIX (the consumer price index less mortgage costs), which is the Bank’s targeted measure of inflation, rose 4,8% year on year in June.

A Reuters poll of economists says inflation probably slowed slightly, to 4,7%, last month, mainly as a result of technical factors.”