Annual consumer price inflation slowed to its lowest level in two years, reaching 4.7% in July, from 5.4% in June, according to Statistics SA.
This is the lowest reading since July 2021, when the rate was 4.6%. It is also the second consecutive month that inflation was below the 6% upper limit of the SA Reserve Bank’s target range. According to a Reuters poll, economists expect the central bank to likely to leave its repo rate unchanged this year before kicking off a cutting cycle in early 2024.
Consumer prices increased on average by 0.9% between June and July, up from the monthly rise of 0.2% recorded in both May and June.
While it was previously a major upward driver of inflation, the transport category helped pull overall inflation down in July. Headline consumer inflation hit a 13-year high of 7.8% in July 2022, with transport contributing 3.4 percentage points to the headline rate, driven by fuel prices.
Other factors contributing to the moderation of the headline rate were food and non-alcoholic beverages, which eased to 9.9% in July from June’s 11%, while inflation for bread and cereals slowed to 13.1% from 15.5%.
Maize meal prices fell on average by 0.7% between June and July, while annual meat inflation declined for the fifth month in a row, easing to 5.1%.
While the annual rate for milk, eggs and cheese eased marginally from 14.4% to 14.1%, cheese prices climbed – with cheese spread prices up 19.5%, cheddar up 19%, and gouda up 16.6%.
Sugar prices were up as well. White sugar on average 20.8% and brown sugar 22.8% more expensive than a year ago. The sugar, sweets and desserts category recorded an annual inflation rate of 18.7%, up from 16.4% in June – its highest reading since May 2017.
The annual rate of inflation for alcoholic beverages also heated up, rising to 7.8% in July from 6.9% in June.
Statistics SA is currently surveying municipal tariffs. Based on its preliminary data, on average, households are paying 14.5% more for electricity, while water tariffs increased by 9.6% and property rates by 2.9%. A complete analysis will be included in August’s consumer price index release.
