Annual consumer price inflation decreased from 5.1% in June to 4.6% in July, reaching its lowest point since July 2021 and coming close to the South African Reserve Bank’s target of 4.5%.
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This decline in inflation suggests a possible interest rate cut in September.
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The reduction in inflation was partly due to lower fuel prices in July, which helped lower transportation costs.
Additionally, the price increase for food and non-alcoholic beverages slowed to 4.5% in July from 4.6% in June. Food inflation has significantly decreased from a peak of 9% in November last year and is now at its lowest since September 2020, during the pandemic.
In July, meat prices fell by 0.4% compared to June and were only 1% higher than the previous year. Meat, a major component of household food expenses, has seen some relief. However, prices for items such as rice (+21% year-on-year), pizza and pies (+12%), and samp (+7%) have risen. Additionally, instant coffee (+22%), black tea (+16%), and other coffee products saw notable price increases.
The July inflation figures also reflect new municipal tariff hikes. Electricity tariffs increased by 12.1%, down from 15.3% last year, while water tariffs rose by 7.5%, compared to 9.6% in 2023. Property rates, however, surged by 10.7%, surpassing the 8.4% increase seen the previous year.
Statistics South Africa reports that, over the past year, water tariffs have averaged a 9.9% increase, electricity tariffs have risen by 9.5%, and property rates have gone up by 6.6%.
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