The South African rand slipped in early trade on Friday as investor focus shifted to the release of domestic consumer price inflation data and next week's rate-setting meeting, which is expected to be a close call.

The rand traded at 16.46 against the dollar at 0718 GMT, roughly down 0.4% from its previous close.

The currency has remained under pressure for much of the week as heightened tensions in the Middle East dampened risk appetite. It is on track to lose about 1% this week for a second consecutive weekly decline.

Traders are now focused on June consumer inflation data due on Wednesday for fresh clues on the South African Reserve Bank's (SARB) plans on interest rates.

Headline inflation rose less than expected to 4.5% year on year in May, from 4.0% in April. Analysts had forecast 4.7% for the May figure.

Johann Els, chief economist at PSG Financial Services, expects inflation to edge up to 4.7% in June and for the SARB to leave its main lending rate unchanged at next week's meeting.

However, Els said the renewed conflict in the Middle East and resulting rise in oil prices had complicated the policy outlook, keeping an increase of 25 basis points on the table.

The central bank raised its main lending rate for the first time in three years at its previous meeting.

On the Johannesburg Stock Exchange, the Top-40 index was down 0.5% in early trade.

The yield on South Africa's benchmark 2035 government bond dropped by 2.5 basis points to 8.475%.