South African consumer inflation accelerated more than expected in May, boosting chances the Reserve Bank might start lifting interest rates before the end of the year rather than early in 2012.

Government bond yields retreated, with the yield on the four-year issue rising to 7.49% from 7.445% prior to the release of the CPI numbers at 08:00 GMT.

May inflation came in at 4.6% year-on-year from 4.2% in April, Statistics South Africa said, and also quickened to 0.5% month-on-month from 0.3%, the main drivers being accelerating food and fuel prices.

Economists surveyed by Reuters last week had expected headline inflation to tick up slightly to 4.3% and remain steady at 0.3% month-on-month.

"We expect CPI inflation to continue on the upwards trajectory for the remainder of the year, reflective of steep price increases for food and also administered prices -- electricity, petrol, rates and taxes," Investec economist Kgotso Radira said.

"Steep wage increases also pose upside risks to the inflation outlook. We maintain our view of a 50 basis point interest rate hike in Q4 2011."

Rising inflation is likely to see workers stick to their demands for much higher wages, with the National Union of Mineworkers (NUM) currently seeking increases of between 13.5% and 20% from major gold, coal and platinum producers.

"If you look at food inflation and fuel inflation then we are in trouble. Our members are in trouble and are in more trouble than the employers are," NUM spokesperson Lesiba Seshoka said.

Inflation has slowly edged up since hitting a five-year low of 3.2% in September last year.

The central bank in May raised its inflation forecast and said inflation was likely to pierce its 3% to 6% target band briefly in the first quarter of 2012, peaking at 6.3%.

It said it would not hesitate to act on signs that inflation was consistently above the target band.

However, the main repo rate has remained unchanged at 5.5% at three policy meetings so far this year, after 650 basis points of cuts in the two years to December 2010.

Some analysts think the Reserve Bank bank will hold off monetary tightening until next year as economic growth struggles to gain traction after a recession in 2009.