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This morning, South Africa reported that consumer prices rose 5,1percent y/y in July, up from 4,6 percent y/y in the previous month. The July reading is still above market expectations of a 5,0 percent increase. On a month-on-month basis, consumer prices in the country rose 0,8 percent in July compared to the previous month.

The main drivers of higher consumer prices were transportation costs and housing and utilities, which increased to 1 percent and 1,3 percent in July, respectively. Miscellaneous goods and services, on the other hand, decreased to 0.9 percent in the same month.

Following the release, the South African rand gave back some of the gains accumulated this week and traded at 14,42 against the US dollar, as of 9:35 London time. Nevertheless, this is still well below this week’s high for the pair of 14.80 on Monday.

The pair seems well support above the June high of 13,99 and could face increased selling pressure at the August 17 high of 15,02, followed by the May 2016 high of 15,98.

To the downside, the July low of 13.07 could provide support for the pair if the June high of 13.99 breaks.

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