The rand was 0.45% weaker at 14.0500 per dollar by 1500 GMT.
Headline CPI quickened to 4.4% year-on-year in April, its highest since February 2020 and close to the mid-point of the central bank's target range.
"We think that the Reserve Bank will keep rates on hold for longer than investors currently expect in order to support the economy," Jason Tuvey, senior emerging markets economist at Capital Economics, said in a note.
"Indeed, fears of a third wave of COVID-19, combined with the slow vaccine rollout and harsh fiscal austerity, mean that rates will probably stay at their current low for longer than most currently anticipate."
The South African Reserve Bank (SARB) will decide on lending rates on Thursday, with polls overwhelmingly predicting another hold at 3.5%, but with a hawkish tilt.
The CPI figure also means South Africa is now running a negative real rate, a situation the central bank has typically not tolerated for extended periods. It also risks turning off investors seeking high returns.
Data showing South African retail sales contracted by 2.5% year on year in March also dampened the mood.
Stocks fell, with the Johannesburg Stock Exchange's Top-40 Index slipping 2.31% to 59,777 points and the broader All-Share Index closing 2% lower at 65,856 points.
While some retailers suffered, the biggest losers on the blue-chip index were platinum firms, which were dragged down by a more than 2% decline in the price of the precious metal.
Impala Platinum fell 8.7%, followed by Anglo American and Glencore, which were down 5.7% and 4.5% respectively.
Bonds weakened, with the yield on the benchmark government issue due in 2030 adding 6 basis points to 9.135%.
(Reporting by Olivia Kumwenda-Mtambo; editing by Jonathan Oatis)