July 29 (Bloomberg) -- South African credit growth unexpectedly accelerated to an annual 20.3 percent in June as higher interest rates failed to curb borrowing.

Borrowing growth by households and companies compared with 19.7 percent in May, the Pretoria-based central bank said today. Credit was forecast to increase 19 percent, according to the median estimate of 16 economists surveyed by Bloomberg.

The central bank has raised interest rates six times in a year to tame inflation, which has exceeded its 6 percent target since April 2007. The increase in credit growth may add to pressure on the bank to raise rates again when its monetary policy committee concludes its next meeting on Aug. 14.

``We say that rates will remain on hold in August, but to be convinced about that the credit numbers had to slow more than what they have done,'' said Kevin Lings, an economist at Stanlib Asset Management in Johannesburg. ``They cast uncertainty over the August meeting.''

Inflation accelerated to an annual 10.9 percent in May from 10.4 percent in the previous month. The Reserve Bank has increased the repurchase rate by 5 percentage points to 12 percent since June 2006.

Some people may be taking out loans to pay off existing debts, Lings said. Moreover, ``prices are going up, so in real terms credit is slowing quite noticeably.''

Higher interest rates have cut spending on cars, with sales dropping an annual 22 percent in June, an industry body said on July 2. Retail sales growth slowed to 12.9 percent in June from 13.4 percent the month before, the Retailer Liaison Committee said on July 25.

House prices rose an annual 3.8 percent in June, the slowest pace since September 1999, Absa Group Ltd., the country's biggest mortgage lender, said on July 7.

The broad M3 measure of money supply rose an annual 20.1 percent in June, compared with 20.9 percent in May, the central bank said. That was in line with the median estimate of the economists surveyed by Bloomberg.

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

Last Updated: July 29, 2008 03:44 EDT