Last week, tensions between the US and Iran remained elevated, with Tehran signalling that the conflict could continue until 2029 and Washington maintaining that it could enforce a naval blockade indefinitely. In South Africa, mining output contracted in the second quarter, while the unemployment rate rose to its highest level since 2022.
International Market Developments
Reports initially pointed to progress in negotiations to reopen the Strait of Hormuz, but talks stalled over Iran’s demands for reparations, sanctions relief and an end to the US blockade. President Trump rejected the conditions, maintained that Washington controls the waterway and increased pressure by imposing 100% tariffs on drones. With the ceasefire due to expire today, uncertainty over a possible extension continues to constrain transit and keep energy prices elevated.
US Headline CPI slowed from 3.5% to 3.4% year-on-year, while core inflation edged down from 2.6% to 2.5%, its lowest level in five months. On a monthly basis, CPI rose by 0.1% after declining by 0.4% in June, while core prices increased by 0.2% following a flat reading. Producer prices were unchanged as goods costs fell for a second consecutive month. Core PPI moderated from 0.4% to 0.2% month-on-month but remained 4.2% higher year-on-year.
Looking ahead, attention will turn to Wednesday’s release of the July FOMC minutes in the US, as well as to UK retail sales data.
Local Market Developments
Transnet is seeking private partners to refurbish, finance, operate, and maintain over 9,000 km of branch rail lines, aiming to boost private participation and improve freight rail performance across South Africa’s network.
In the latest data release, Statistics South Africa reported that mining output fell by 4% in June compared with the same month a year earlier, following a revised 5.1% decline in May. Platinum group metals, down 8.4%, were the main drag, while gold output rebounded by 6.2% after declining by 4.4% in the previous month. On a monthly basis, production recovered by 0.3% after May’s sharp 5.2% fall.
Meanwhile, the Q2 Labour Force Survey showed the unemployment rate rising to 33.6% from 32.7% in the first quarter. The number of unemployed people increased by 4.2% to 8.48 million, employment edged down by 0.1% to 16.74 million and the participation rate slipped to 59.6%.
Looking ahead, South Africa’s inflation and retail sales releases will be key in guiding the SARB’s September policy stance.