June inflation heats up as power, food prices bite
Consumer price index (CPI) inflation came in at 3% for June – from 2.8% in May.
Inflation has been below 3% - the bottom level of the SA Reserve Bank's target band - from March to May.
But in June, food prices continued to heat up. Food and non-alcoholic beverages were 5.1% more expensive than a year ago. Beef was a big contributor, as foot-and-mouth disease fuelled price hikes. Meat prices rose by 2.2% in the single month from May to June - and were almost 7% higher than a year before.
But the biggest surge over the past year, of more than 13%, was in prices of fruit and vegetables. Hot beverages were also 10.1% more expensive than a year ago.
Household electricity and gas prices were 11% higher than a year before, reflecting the latest Eskom price hikes.
Housing and utilities saw a month-on-month increase of 0.5%, with rent increasing 1% month-on-month.
June's inflation was still tempered by lower diesel and fuel prices - but this was reversed in July with large hikes after Israeli and US attacks on Iran triggered an oil price spike.
While slightly higher than May, June's inflation number is in line with expectations and should bolster the case for the Reserve Bank's monetary policy committee to cut the repo rate by 25 basis points to 7% on Thursday next week.
A cut is also supported by South African inflation expectations, which in the second quarter reached an almost four-year low.
Unions, households and businesses are surveyed by the Bureau for Economic Research on their expectations for inflation over the next two years, which cooled to 4.5%.
Expectations about where inflation is heading play a key role in driving prices higher. When workers expect inflation to remain high, they demand higher salary increases, which in turn drive prices higher as companies must recoup these higher costs.
The SA Reserve Bank has been pushing hard to lower SA's inflation target to 3% (from a band of 3% to 6%).
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
24 minutes ago
- Yahoo
Should the state pension age be raised above 66? Yahoo readers have their say
The government has announced a review of the state pension – but has ruled out making changes to the triple lock for now Yahoo UK's poll of the week lets you vote and indicate your strength of feeling on one of the week's hot topics. After the poll closes, we'll publish and analyse the results each Friday, giving readers the chance to see how polarising a topic has become and if their view chimes with other Yahoo UK readers. Huge changes to the UK's pensions could be on the cards as chancellor Rachel Reeves seeks to balance the government account books. Ministers have announced the Pensions Commission - which recommended auto-enrolment in workplace schemes in 2005 - is set to be revived for the first time in almost two decades in a bid to get Britons saving more for retirement. But the age at which the state pension can be drawn is also expected to be increased, with Reeves saying it was "right" to examine the issue in light of increasing life expectancy. Currently set at 66, the age is due to rise to 67 by 2028 and then to 68 between 2044-2046 - although the prospect of bringing this timeline forward has also been raised. Last year, the UK spent £138 billion on the state pension, equivalent to 5% of GDP, a figure the Office for Budget Responsibility expects to rise to 7.7% by the 2070s. Changes to the pensions 'triple lock', which ensures state pensions rise by 2.5%, CPI inflation, or the increase in average earnings every year, are also being considered. However, the triple lock will not be considered by the Pensions Commission and Labour has promised it will not be altered before the end of the current Parliament. In our poll earlier this week, Yahoo News UK asked our readers: "Should the state pension age be raised above 66?" It received 5,403 votes and showed an overwhelming majority - 85% - in favour of keeping the current age in place. The poll also asked readers for their thoughts on the pensions triple lock. Once again, 85% said they wanted to see the guarantee maintained, with even fewer arguing it should be scrapped. The poll's Have Your Say feature elicited some strong feelings and a mixture of opinion, with most feeling the state pension age should not be raised - but even this provoked a split over why it should be held steady. JanR, from Hertfordshire, said: "I think the state pension age should remain as it is. Most people work all their lives and deserve some down time whilst they are hopefully fit enough to enjoy it." David g, from Manchester, agreed, but said the focus should be on younger people still climbing the career ladder, rather than those already at the top. He said: "Keeping people in work longer to shorten the amount of pension they claim in what remains of their lives is the wrong thing to do. What about the younger generation looking for their first jobs? What will be left for them to do? Nothing. The government has totally got its priorities wrong. Why should we be forced to work for over fifty years? This is grossly unfair" P smith, from south Wales, also concurred, but argued those who had contributed to their pensions should not be penalised at the expense of those who had not, saying: "Why should people who have contributed to a works pension scheme work later in life to help support those who haven't." Others however, like Kevin F, from Derby, took the opposite view. He said: "The pension age has to increase in line with life expectancy. It's only fair to the younger generation." Read more of Yahoo UK's Poll of the Week articles
Yahoo
11 hours ago
- Yahoo
Will U.S. Government Bonds Rally?
While the U.S. Federal Reserve's primary monetary policy tool is the short-term Fed Funds Rate, market forces determine interest rates further along the yield curve. In a June 5, 2025, Barchart article on Moody's downgrade of the U.S. sovereign credit rating, I concluded: Moody's reduced the U.S. sovereign credit rating because of debt concerns. Meanwhile, Republican opposition to the 'big beautiful bill' in Congress and the Senate comes from members who believe increasing the debt is a tragic mistake. JP Morgan Chase's Jamie Dimon told markets to expect a crack in the U.S. bond market, as he expects higher rates and lower bonds on the horizon. The President's Big Beautiful Bill passed and was signed into law, and the bond market has not 'cracked' as of July 2025. The September 30-year Treasury Bond futures were trading at 112-02 on June 2, 2025, and were little changed in late July. The sideways trading range remains intact The U.S. 30-year Treasury Bond futures have been in a bearish trend since the Q1 2020 high. The twenty-year chart highlights the decline that took the long bond futures to a 107-04 low in Q4 2023. Since then, the bonds have been in a 110-01 to 127-22 trading range. At the 112 level in July 2025, the bonds were trading not far above the low end of the trading range. Meanwhile, long-term technical support below the Q4 2023 low of 107-04 is at the Q2 2007 low of 104-16. Technical resistance is at the 127-22 level. While the trend remains bearish, the nearly two-year trading range has remained intact. A change at the U.S. central bank is on the horizon The short-term Fed Funds Rate remains at a midpoint of 4.375% unchanged in 2025. After cutting the Fed Funds Rate by 100 basis points in 2024, the central bank has left rates unchanged, citing concerns that tariffs will exacerbate inflationary pressures. Meanwhile, President Trump has said that U.S. short-term rates should be at least 2% lower than the current level, blaming the central bank and Fed Chairman Jerome Powell for wasting billions on servicing the U.S.'s over $37 trillion debt. While the President told markets that he is not likely to fire Chairman Powell, the writing is on the wall, and the President will likely replace the current Chairman when his term expires in May 2026. The successor will undoubtedly favor lower short-term rates. The Fed has forecast two rate cuts, totaling 50 basis points, by the end of 2025. However, the latest 50% tariff on copper and the latest June CPI data that came in higher than the previous month could prolong the pause in rate cuts from the July to the September FOMC meeting. However, the trade deal with Japan and the rising potential for an agreement with the European Union before the August 2 deadline could force the Fed's hand to cut the short-term Fed Funds Rate, as 4.375% is too high in an environment where stagflationary pressures are diminishing. No guarantee that lower short-term rates will lead to lower long-term rates The Fed controls monetary policy primarily through its short-term Fed Funds Rate. The central bank is an independent body, and its mandate is full employment and stable prices. The Fed's benchmark for stable prices is a 2% inflation target. While the economic condition has declined toward the 2% target over the past years, it has not reached the level. Meanwhile, the latest CPI data showed a 0.3% increase for June, pushing the 12-month inflation rate to 2.7%. Core CPI, excluding food and energy, rose 0.2% for the month, with the annual core rate at 2.9%. While both the CPI and core CPI rose, the increases were no surprise, as they were in line with expectations. Rates further along the yield curve are influenced by market sentiment. The Fed cannot directly control long-term interest rates, but it does have some tools that can influence longer maturities. Quantitative tightening or easing involves selling or buying long-term government or mortgage-backed securities to influence longer-term rates. However, the government bond market is massive, and its path of least resistance, which determines long-term U.S. rates, is created by the buying or selling of debt securities. Therefore, there are no guarantees that a lower short-term Fed Funds Rate will lead to lower long-term U.S. interest rates. The debt will rise- Does that matter? The U.S. debt currently stands at over $37 trillion, and the administration's economic package allows for the debt ceiling to rise by an additional $5 trillion. Moody's, the credit rating agency, lowered its rating on U.S. sovereign debt, citing the debt level. Many economists believe that the debt is a ticking financial time bomb, leading to slowing economic growth, higher interest rates, and a potential financial crisis. Other economists argue that the U.S. debt does not pose a threat to the U.S. economy, particularly if the debt is denominated in U.S. dollars. The U.S. can issue debt in its own currency, making default less likely and allowing the government to manage its debt obligations with flexibility. Moreover, the government can control spending and institute policies to grow its way out of debt through increased productivity and innovation, resulting in rising tax revenues. The administration argues that tariffs will offset some of the rising debt levels. The bottom line is that if investors have confidence in the U.S. government's ability to repay its debt, the economy will retain stability. There are compelling arguments on both sides about whether the debt level matters. Clearly, lower debt levels are preferable. The TLT ETF tracks long-term U.S. interest rates The most liquid ETF product tracking long-term U.S. interest rates is the iShares 20+ Year Treasury Bond ETF (TLT). At around $86 per share, TLT had over $47.6 billion in assets under management. TLT trades an average of more than 37 million shares daily and charges a 0.15% management fee. The quarterly chart shows the TLT's performance over the past twenty years, falling from the 2020 high to the Q4 2023 low and trading in a $83.30 to $101.64 range since early 2024. TLT is a highly liquid ETF that does an excellent job tracking price action in the U.S. long bond futures. The range since the beginning of 2024 highlights the technical support and resistance levels. If rising U.S. debt levels lead to selling in the bond market, TLT is likely to head lower. However, if the debt doesn't matter and the U.S. can reduce spending and grow its way out of the debt through economic initiatives, the TLT will likely rally. For now, long-term interest rates and the TLT remain in a trading range, closer to the lows than the highs since early 2024, and are waiting for the next economic shoe to drop. Expect short-term rates to decline, but the path of long-term rates depends on the success of current economic initiatives. On the date of publication, Andrew Hecht did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Bloomberg
18 hours ago
- Bloomberg
Trump Ally Sues Powell Demanding FOMC Meeting Public Access
An investment firm headed by a supporter of President Donald Trump sued Federal Reserve Chairman Jerome Powell and other Fed officials demanding public access to monetary policy meetings. James Fishback's Azoria Capital said in a suit filed Thursday that the decades-old practice of holding Federal Open Market Committee meetings behind closed doors violates government transparency laws. The fund asked a federal court in Washington to require the Fed to open its July 29-30 meeting.
