South Africa this week marked a full year without power outages, but the effects of the energy shock from the Iran war are now starting to kick in. We think the rise in inflation in April was probably large enough to prompt the Reserve Bank to begin a modest tightening cycle, beginning with a 25bp hike (to 7.00%) next week. In Kenya and Mozambique, growing social unrest caused by higher energy prices could put pressure on governments to provide more support, but that would add to both economies’ fiscal woes.
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