The Russia-Ukraine conflict could hurt South Africa's financial stability through rising food and fuel inflation, lower economic growth, and high unemployment, said the country's central bank on Wednesday. 

South Africa's central bank last week increased its prime lending rate by 50 basis points to 4.75 percent, its highest increase in six years, to rein in inflation.

In its biannual health check of the financial system, the South African Reserve Bank (SARB) said that while the financial system of Africa's most advanced economy was "resilient", stagflation fears could exacerbate inequality and slow growth.

"South Africa remains vulnerable to spillover effects of global events, particularly the Russia-Ukraine conflicts and global stagflation concerns," it said, adding that it could also disrupt social stability.

Stagflation is characterized by a prolonged period of high inflation, lower economic growth, and high unemployment.

The SARB said in 2022 it will set up a deposit insurance company that would insure deposits of almost 90 percent of depositors with a proposed coverage level of 100,000 rand.

(With input from Reuters)