After holding steady for ten months in the 5 – 6% range, annual consumer price inflation slowed to 4.6% in July 2024 from 5.1% in June 2024, South Africa’s statistics body has announced.
The July 2024 inflation print is the lowest in three years since July 2021, when the rate was also 4.6%. Lower annual rates were recorded for several product groups, most notably food & non-alcoholic beverages (NAB), transport, and housing & utilities.
- The annual rate for food & NAB was 4.5% in July 2024, down from 4.6% in June 2024.
- Food & NAB registered a slowing inflation trend since its most recent high of 9.0% in November 2023 and is currently at its lowest since September 2020 (3.8%).
- While overall food inflation has slowed, bread & cereals is showing upward momentum. The category recorded an annual increase of 5.6% in July, up from June’s 5.2%.
Products with the largest annual increases in July 2024 include:
- Rice (up 21.3%)
- Pizza or pies (up 11.6%)
- Samp (up 6.9%)
- Maize (5.1%)
On a positive note, bread flour, cake flour, pasta, and macaroni are cheaper than a year ago, said Stats South Africa.
Except for public transport, most categories in the transport group witnessed lower annual rates. This includes new and used vehicles, running costs, and fuel. As a result, annual transport inflation softened to 4.2% in July 2024 from 5.5% in June 2024.
Fuel prices receded for a second straight month, declining by 3.6% in July 2024. This followed a 4.6% decrease in June 2024. Inland 95-octane petrol was 99c cheaper, falling from R24.25 ($1.35) in June 2024 to R23.26 ($1.30) in July 2024. The average price for diesel declined by 41c over the same period, from R23.76 ($1.33) to R23.35 ($1.30).
Lower inflation supports the case for the central bank (SARB) to start lowering South Africa’s high interest rates next month [August 2024]. It hiked rates by a cumulative 475 basis points from late 2021 until May 2023, and has kept it unchanged at 8.25% since then.
The real interest rate has been at the highest level in 18 years, and the central bank may consider lowering borrowing costs by 50 basis points at least once this year [2024] according to experts.
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