There are two major economic data releases due out this week — consumer inflation for May and the current account deficit for the first quarter.

Both will be scrutinised for clues as to whether SA’s economic recovery is gaining traction.

1. Consumer inflation:

• BNP Paribas economist Jeff Schultz hopes for a moderation but Citi Bank economist Gina Schoeman expects CPI inflation to tick up to 4.7% year on year.

• CPI inflation accelerated sharply to 4.5% in April, thanks to VAT rising to 15% from 14%.

• Fuel prices rose 3.5% in May, which could push it higher.

• Weak consumer demand could have a mitigating effect.

2. Current account deficit:

• The deficit is expected to widen to 4% of gross domestic product, driven mainly by falling exports and rising imports.

Why it matters:

• Rate hikes and tighter monetary policy in major developed economies have increased pressure on countries with poor fundamentals, like SA.

• SA’s current account and fiscal deficits are among the largest in its peer group.

• SA relies on portfolio flows to finance its current account deficit, which are erratic.

• A deteriorating trade picture — SA posted its first deficit in two years in the first quarter — is a further risk to the current account deficit.

Click here for a more detailed look at what this means for SA's economy.

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