Annual consumer inflation dropped to 4.3% in July, falling from a two-year high of 5.0% in June, according to data released by News24. The July print marks the first time in five months that headline inflation has cooled, dipping lower than the 4.5% rate anticipated by Reuters-polled analysts.
July Headline Inflation Cools to 4.3%
Month-on-month, the consumer price index (CPI) increased by 0.2% in July, slowing down from a 0.7% monthly increase recorded in June. Patrick Kelly, Stats SA head of price statistics, noted that the cooling was driven primarily by softer food inflation, lower municipal tariff increases, and declining fuel prices. Despite the broader moderation, headline inflation remains above the South African Reserve Bank’s 3% target and its tolerance band of up to 4%.
Core inflation, which excludes volatile items such as fuel, food, and electricity, ticked up slightly from 4.1% in June to 4.2% in July. Annabel Bishop, chief economist for Investec, stated that food price inflation had a moderating impact overall on CPI, noting that without it, the inflation print would have been significantly higher.
Food Price Inflation Hits 16-Year Low
Food and non-alcoholic beverage inflation nearly halved, dropping from 1.9% in June to just 0.9% in July according to Algoafm. This represents the lowest food price inflation rate in more than 16 years, returning to levels last seen in June 2010 when South Africa hosted the FIFA World Cup, at which point it was 0.7%.
The slowdown in the food category was heavily influenced by cereal products and meat. Cereal products recorded an annual change of -2.0%, down from -1.5% in June, with notable monthly drops in maize meal (-3.1%), white bread (-0.6%), and macaroni (-0.7%).
Meat price inflation slowed significantly to an average of 1.5% in July, a sharp decline from its peak of 13.5% in January amid a foot-and-mouth disease (FMD) epidemic. As the country recovers from FMD, unprocessed beef prices registered negative annual changes:
- Stewing beef was 7.9% cheaper than in July 2025.
- Beef steak prices dropped by 6.1%.
- Beef mince was 5.8% cheaper.
In contrast, several processed meat products saw annual increases, including corned meat (+11.8%), meat patties (+7.8%), russians (+7.7%), and sausages (+6.2%). The lower food price inflation helped limit overall price pressures for lower-income households, with the bottom 30% of earners experiencing inflation of 3% or lower, compared to up to 4.6% for wealthier households and 4.4% for pensioners.
Fuel Prices and Transport Costs Retreat
Annual transport inflation cooled sharply to 8.9% in July, down from 12.7% in June, driven by significant month-on-month relief at the petrol pumps.
Petrol prices decreased by 7.1% and diesel dropped by 11.7% between June and July. This monthly decline pulled the annual rate for fuel down to 20.6% from 34.3% in June. However, fuel remains substantially higher on an annual basis, with petrol costing 19.3% more and diesel 28.8% more than a year prior.
Softer Municipal Tariff Increases in 2026
Municipal rates and taxes implemented in July contributed smaller increases overall compared to the previous year. According to Stats SA data:
- Electricity tariffs rose by 8.1% in 2026, down from 10.4% in 2025, marking the lowest electricity increase since July 2020.
- Water tariffs increased by 10.2%, compared to 12.1% in 2025.
- Refuse removal costs rose by 4.7%, down from 6.6% the previous year.
- Sewerage tariffs increased by 7.8%, outpacing the 6.5% rise recorded in 2025.
- Property assessment rates increased by 4.9% in both 2025 and 2026.
Housing and utilities overall remained the largest contributor to annual inflation at 5.2%, adding 1.3 percentage points to the headline number. Transport contributed 1.2 percentage points, while insurance and financial services added 0.6 of a percentage point with an annual rate of 5.7%. Regionally, annual inflation varied across provinces, ranging from a low of 2.9% in Limpopo to a high of 5.2% in the Western Cape.
