South Africa’s inflation rate eased for the first time in five months in July, partly driven by a sharp decline in fuel prices. However, analysts have warned that inflation could rebound in the near term, citing the recent escalation of hostilities between the United States and Iran, which has pushed crude oil prices higher on international markets.
Inflation in Africa’s largest economy slowed to 4.3% year-on-year in July, coming in below the 4.5% forecast by economists polled by Reuters and down from 5.0% recorded in June, according to data released on Wednesday by Statistics South Africa.
The agency attributed the slowdown to three principal factors: a moderation in food inflation, smaller increases in municipal tariffs, and a decline in fuel prices.
Food and non-alcoholic beverage inflation fell to its lowest level in more than 16 years, dropping to 0.9% on an annual basis, driven primarily by movements in the prices of cereals and meat.
Municipal authorities apply tariff increases every year in July, but most categories recorded smaller increases than those implemented in 2025.
Petrol prices fell 7.1% and diesel prices declined 11.7% between June and July, pulling the annual rate of fuel inflation down from 34.3% in June to 20.6%.
Despite the decline, inflation remains above the central bank’s 3% target.
Data for August inflation will be released on the same day that the central bank announces its next monetary policy decision, scheduled for 23 September.
In July, the central bank surprised investors and economists by holding interest rates unchanged, concluding that monetary policy remained sufficiently restrictive to bring inflation back to target within two years.
Source: Diário Económico
Original article: https://www.diarioeconomico.co.mz/?p=531942
