JOHANNESBURG, June 18 (Reuters) - The South African rand

edged up on Wednesday after steady domestic inflation data and

stronger-than-expected retail sales figures, as global investors

awaited an interest rate decision by the U.S. Federal Reserve

later in the day.

At 1511 GMT, the rand traded at 17.96 against the dollar

, roughly up 0.4% from Tuesday's close.

The risk-sensitive currency fell more than 1% on Tuesday as

hostilities between Israel and Iran led investors towards safe

assets, dulling the appeal of the local currency which was also

on the back foot for most of Wednesday's trading session.

The local unit gained ground after the country's

statistics agency reported that South Africa's inflation rate

remained

unchanged at 2.8%

in May, in line with the forecast by economists polled by

Reuters and below the bank's 3% to 6% target range.

The data supports the case for a more accommodating

interest rate stance at the monetary policy meeting in July,

said Casey Sprake, an economist at Anchor Capital.

Statistics South Africa also released

better-than-expected April

retail sales figures

, which came in at 5.1% compared to 3.1% estimated in a

Reuters poll.

The dollar last traded about 0.2% weaker against

a basket of currencies as traders expected the Fed to leave

rates unchanged, amid persisting tensions in the Middle East.

The Johannesburg Stock Exchange's Top-40 index

closed up 0.4%.

South Africa's benchmark 2035 government bond was

slightly weaker, with the yield up 1 basis point to 10.12%.