July 31 (Bloomberg) -- The cost of goods leaving South African factories and mines rose at the fastest pace in 19 years in June, adding to pressure on the central bank to raise interest rates.

Producer-price inflation accelerated to 16.8 percent from 16.4 percent in May, Pretoria-based Statistics South Africa said today. Prices were expected to rise 17 percent, according to the median estimate of 16 economists surveyed by Bloomberg. Prices rose 2.6 percent in the month, as state electricity utility Eskom Holdings Ltd. began charging higher winter tariffs.

Factory-gate inflation exceeded 10 percent for a sixth consecutive month in June, adding to pressure on consumer prices as retailers pass on higher costs. That may add to speculation the central bank will raise its benchmark interest rate for a third time this year on Aug. 14.

``These numbers yet again confirm that South Africa is locked in a vicious cycle of rising prices,'' Danelee van Dyk, a Johannesburg-based economist at Standard Bank Group Ltd., Africa's largest lender, said in a note to clients. ``This confirms our expectation that the South African Reserve Bank will hike interest rates yet again in August.''

The central bank raised its benchmark rate by half a percentage point to 12 percent on June 12, the sixth increase in less than a year. The consumer inflation rate reached 11.6 percent in June, exceeding the central bank's target for a 15th consecutive month.

Prices of imported goods used in manufacturing rose an annual 24.6 percent in June, up from 23 percent in the previous month, the statistics office said.

South African government bonds gained after the release of the inflation data. The yield on the benchmark 13.5 percent security due September 2015 lost 9 basis points from yesterday to 9.32 percent by 12:08 a.m. in Johannesburg. The rand strengthened to 7.3806 per dollar from 7.3918.

To contact the reporters on this story: Mike Cohen in Cape Town at mcohen21@bloomberg.net

Last Updated: July 31, 2008 06:26 EDT