Consumer Price Inflation (CPI)decreased for the first time in July since February, after having risen over the past four months due to rising fuel and global oil prices, data from Statistics SA showed on Wednesday.
Stats SA said that annual consumer price inflation was 4.3% in July 2026, down from 5.0% in June 2026. “The CPI increased by 0.2% month-on-month in July 2026.” Inflation data is important because it acts as a signal for costs, consumer demand, and monetary policy—all of which directly affect business planning and investment decisions.
PSG chief economist Johann Els said that July CPI inflation came out lower than expected at 4.3%, with a monthly increase of only 0.2%.
“The downside surprise came mainly from food inflation, which dipped from 1.4% in June to just 0.6% in July. Looking through the food components, there seems to be almost no second-round impact from the earlier increase in fuel and fertilizer costs on food inflation.”
Els added that he expects inflation to remain around 4.5% for the next few months before easing further later this year.
“Combined with the Fed now looking unlikely to hike interest rates, given the softer US inflation numbers and weaker labour market, this should give the SARB's Monetary Policy Committee (MPC) room to keep rates unchanged at the September meeting,” he said.
Professor Simphiwe Madikizela, senior lecturer in economics at UNISA's School of Graduate Business and Leadership, said that the decline of CPI for July to 4.3%, down from 5% in June and 4.5% in May, is a positive development for an economy that desperately needs a boost.
“The major contributor to this decrease is the decrease in fuel prices that further reduces transport costs and logistics costs, which over time would reduce food prices,” he said.
Madikizela added that this is to be expected given the relief in the Middle East war when a peace deal was signed; the markets reacted positively to the news, with the price of crude oil significantly going down to levels before the war started at the end of February.
“However, we now know that the peace deal did not last for long, and with the more strikes that continued, we saw the crude oil price rising again, now at $91 (R1478) per barrel. This development further highlights that the decision made by the recent MPC meeting of the SARB that left interest rates unchanged was a correct one.”
In a statement, the Government said that they welcomed the cooling of consumer inflation for the first time in five months.
“The decline provides some relief to households and eases pressure on the cost of living. The Government recognises that many South Africans continue to face significant household financial pressures. While the easing of inflation is positive, the Government remains focused on measures that support households, strengthen food and energy security, create employment opportunities, and promote inclusive economic growth.”
The statement added that the moderation of inflation can create a favourable environment for economic activity and contribute to improved economic confidence.
Professor Waldo Krugell, an economist at North-West University, said that he doesn't think a lot of people expected the decrease in the inflation rate.
“The pressure on prices is still very much a story of fuel and transport as well as municipal rates. On the other side of the coin you have very low food price inflation in July. We have to remember that fuel prices decreased in July. Going forward, that picture would look different since we saw some increases in August, and more seem likely in September.”
Prof Raymond Parsons, a North West University Business School economist, said: “The consensus view among analysts has been that, although the global energy crisis would mean a temporary surge in headline inflation earlier in 2026, the effects would gradually dissipate later in the year. However, core inflation edged up slightly to 4.2%, which suggests that price pressures remain sticky. The ‘higher-for-longer’ MPC interest rate stance is likely to persist for now.”
Annabel Bishop, Investec's chief economist, said that the biggest driver in the CPI on the month was housing and utilities, as upwards pressure came from rentals (4.1% y/y), electricity (8.3% y/y), and water prices (6.4% y/y), with the annual increase in electricity prices captured in July. “Producer prices have about a one-month lag with consumer prices.”
Dr Lerato Ntuli, economist at Anchor Capital, said that core inflation, which excludes the more volatile food and energy components, remained relatively sticky, edging up to 4.2% YoY from 4.1% previously. “Insurance and financial services inflation remained elevated at 5.7% YoY, only marginally lower than 5.9% in June.”
Yogashen.pillay@nationalmg.co.za
THE NATIONAL