South Africa's NERSA decision in focus

South Africa' National Energy Regulator of South Africa (NERSA) announces its decision on electricity prices on 29 June. The troubled state-owned utility Eskom has requested a further 12% tariff rise. 

Eskom needs the increase to buy electricity from independent producers, run emergency turbines and pay a potential environmental levy. Severe power outages have weakened South Africa's growth. 

The South African Reserve Bank (SARB) inflation forecasts do not include the larger Eskom tariff request, and already suggest a narrow inflation-target breach in 2016. If Eskom's request is granted, inflation may rise 0.5ppt more over 2016. 

"We think the NERSA decision and the rand exchange rate will determine whether the SARB raises interest rates 25bps of 50bps at its July MPC meeting", says Standard Chartered.