by 11, 0 per cent in june, only slightly below the recent peak of 11, 3 per cent in april. goods price inflation measured 6, 7 per cent, up from 6, 6 per cent in may, while services inflation increased to 5, 8 per cent from 5, 7 per cent in may. the reserve bank ’ s measure of core inflation, which excludes food, fuel and electricity increased marginally to 5, 6 per cent compared with the 5, 5 per cent annual increase in the previous month. bis central bankers ’ speeches on the other hand, producer price inflation for final manufactured goods has been on a downward trend, declining from 7, 0 per cent in april to 6, 5 per cent in may mainly due to a moderation in price inflation of food, beverages and tobacco products. this was below the consensus forecast of 6, 9 per cent but the impact of the drought is still evident in the increase in prices of agricultural products, particularly cereals and other crops as well as live animals and animal products. inflation expectations, as reflected in the survey conducted by the bureau for economic research, have remained anchored near or just above the upper end of the inflation target range. in the second quarter, average expectations for 2016 were 6, 3 per cent, marginally up from 6, 2 per cent. average expectations for 2017 were unchanged at 6, 2 per cent and were marginally down to 5, 9 per cent for 2018. average 5 - year inflation expectations declined from 6, 1 per cent to 5, 9 per cent in the second quarter, with downward revisions by all groups. the yield differential between inflation linked bonds and conventional government bonds ( break - even inflation expectations ) declined across all maturities but remain elevated. the latest inflation forecast of the bank shows a marginal improvement compared with the previous forecast, although an acceleration in inflation is still projected for the second half of this year. inflation is only expected to return to within the 3 – 6 per cent target range during the third quarter of 2017, averaging 5. 5 per cent in 2018. according to sarb forecasts, inflation is expected to average 6, 6 per cent in 2016 and 6, 0 per cent in 2017, compared with forecasts of 6, 7 per cent and 6, 2 per cent at the mpc meeting in may. the expected peak, at 7, 1 per cent in the fourth quarter of 2016, has been revised slightly down from 7, 3 per cent due in part to lower

’ s settlement account. this process will be completed without any manual intervention. the borrowing bank can revert to the next repo tender opportunity to redeem the out - standing amount on its marginal lending facility. the introduction of the new system will have a significant impact on payment, clearing and settlement transactions in south africa. numerous changes have already been made to existing practices, processes, arrangements and agreements and many will be made during the further implementation phases of the system. banks, clearing houses, other payment system intermediaries and corporate customers of banks will need to modify and enhance their systems if they wish to obtain maximum benefits from the new payment processing architecture. 2. 2 the implementation schedule the system will be implemented in a number of phases. the following dates have been set for the implementation of major milestones : date phase 9 / 3 / 98 introduction of electronic end - of - day settlement through samos the samos system and the interbank settlement network sarblink to facilitate the end - of - day settlement process were activated as from 9 march 1998. although the system is now fully functional and the banks are able to transfer funds during the day, settlement finality as at this stage is only achieved at the end of each day. for the time being, end - of - day positions will still be settled in the morning of the next day. 9 / 3 / 98 to 3 / 10 / 98 determining the liquidity impact of real time gross settlement the banks will use the system during this interim period to monitor their liquidity requirements for a trial period prior to the introduction of intraday finality. banks will also be able to bring their back - office systems in line with samos in order to enable them to capitalise on the opportunities provided by the new settlement options. 5 / 10 / 98 introduction of immediate intraday finality the switch to intraday finality will mean that all settlement instructions received by the samos system will become final and irrevocable as and when they are received, if processed successfully. the main implication of this step will be that banks would need to monitor their positions in the samos system carefully and ensure at all times that they have sufficient funds or financial instruments available to process their settlement instructions. to be decided move of the end - of - day settlement process to same day to bring the south african settlement practices in line with international best practice the final endof - day settlement process needs to be effected on a same day basis. the date of