JOHANNESBURG, July 13 Reuters The South African rand extended the previous day39;s rally on Thursday, hitting its highest since midApril, as the dollar sagged on a slowdown in U.S. inflation that could mean fewer Federal Reserve interest rate hikes.

At 1020 GMT, the rand traded at 18.0425 against the dollar , around 0.5 stronger than its previous close.

It earlier traded below 18 to the dollar for the first time since April 20, after closing up 2 on Wednesday when U.S. inflation came in slower than expected.

Casparus Treurnicht, a portfolio manager at Gryphon Asset Management, linked the rand39;s gains to the dollar39;s weakness, saying the Fed now had less incentive to keep raising rates in light of fading price pressures.

Andre Cilliers, currency strategist at TreasuryONE, said given the pace of its recent rally, the rand could consolidate around 18 to the dollar, pointing to fairly healthy dollar demand late on Wednesday when South African importers took advantage of better hedging levels.

In a sign of domestic economic challenges, data on Thursday showed South Africa39;s total mining output fell 0.8 yearonyear in May, down from a revised increase of 3.2 in April.

April was the first month mining output had recorded growth in 14 months and analysts polled by Reuters predicted output would expand 1.4 in May.

Miners face headwinds including the worst rolling blackouts on record, a major drag on powerhungry sectors.

On the Johannesburg Stock Exchange, the bluechip…