Cape Town - Targeted consumer price inflation, which will be released tomorrow, probably slowed to an annual 6.7 percent in June from 7.7 percent the month before, according to the median forecast of 10 economists surveyed by Bloomberg.

Forecasts for CPIX - consumer price inflation less mortgages - ranged from 6.6 percent to 7.3 percent. The index probably was unchanged in June, the second consecutive month that prices have failed to rise.

Overall consumer prices probably rose an annual 7.1 percent in June, down from 7.8 percent, according to the survey. Core inflation, which excludes mortgage interest and some food items, is expected to slow to 6 percent from 6.9 percent.

Inflation probably slowed for an eighth month, after the rand's 60 percent rise against the dollar since the beginning of last year cut the cost of imports, economists said. A fall in petrol prices also helped curb price increases.

The rand's rally helped to slow producer price inflation to an annual 1.1 percent in May, its lowest since at least 1971.

South Africa slashed its annual inflation rate in April by revising the way it calculates rental prices. Inflation slowed to 8.5 percent from a previously calculated 11.2 percent in March and a peak of 12.7 percent in November. The Reserve Bank's inflation target is 3 percent to 6 percent.

Statistics SA delayed the planned release of June CPIX by two weeks, to give its officials time to check the data.

Annual consumer inflation slowed to a 14-month low of 7.7 percent in May and a further decline will fuel expectations that the central bank will cut interest rates for the second time this year when its monetary policy committee meets on August 14.

The decline in inflation "will be driven by falls in petrol and food prices", said John Stopford, at Investec Asset Management in Cape Town, who forecast June CPIX of 6.6 percent.

"These falls will be partly offset by small positive contributions from housing and the periodic survey of medical costs."
Dennis Dykes, chief economist at Nedcor, said: "Now that old inventory has been sold off, the imported stuff is a lot cheaper." The bank group forecast June CPIX of 6.7 percent.