South Africa’s inflation rate slowed to its lowest level in over three years, with headline inflation easing to 4.6% year-on-year in July 2024, down from 5.1% in June. This marks the lowest inflation rate the country has seen in 39 months.
Food prices show significant decline
The continued downward trend in food prices played a significant role in this deceleration. For the eighth consecutive month, food inflation fell, reaching a 55-month low of 3.9% in July 2024. The drop was driven primarily by decreases across most food categories, despite slight increases in prices for bread, cereals, and meat. Monthly food inflation edged down by 0.1%, with notable declines in products such as fruits and vegetables.
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“The trend in food prices has been encouraging, particularly as we see sustained decreases across many categories,” said an industry expert. However, concerns linger over potential price increases in the coming months due to recent weather-related damages to crops in Limpopo, Eastern Cape, and Western Cape provinces.
Electricity costs drive monthly inflation increase
On a monthly basis, headline inflation rose slightly by 0.4% from June to July. This increase was primarily driven by electricity price pressures, which contributed 0.4 percentage points to the monthly outcome. Core inflation, which excludes volatile items like food and energy, also played a role in this monthly rise.
The oils and fats category saw its fifteenth consecutive month in negative territory, although it edged up by 0.5% month-on-month in July. Meanwhile, bread and cereals inflation increased slightly by 0.2 percentage points to 5.6% year-on-year, reflecting drought-induced price hikes in the grain sector.
Experts predict that while there may be some short-term pressures on prices, the combination of an improved weather outlook, a stable rand, and lower global inflation could help limit further increases.
