While Statistics South Africa (StatsSA) announced Consumer Price Inflation (CPI) had decreased for the first time in July since February, this does not mean easing prices for consumers in the country.
After having risen over the past four months due to rising fuel and global oil prices, StatsSA data showed that annual CPI 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,” StatsSA said.
Frank Blackmore, lead economist at KPMG said that the July CPI came out to 4.3% which is a lot lower than the 5% we saw in June.
"The main contributors were the reduction in prices of transport but also contributions were made by food, non-alcoholic beverages as well as financial services, inflation, which both reduced marginally," Blackmore said.
He warned however that there is a worrying issue for consumers in the country.
The worrying issue that remains is that core inflation still remains high at 4.2% which is well above the South African Reserve Bank's (Sarb) target of 3% and therefore I would expect that Monetary Policy Committee (MPC) would hold firm at the current repurchase rate for the foreseeable future."
This means that an interest rate cut from Sarb is less likely.
Rubbing further salt to the wounds of consumers buckling under the cost-of-living crisis is the latest readings from the Central Energy Fund (CEF) on potential fuel price increases for September.
Data from the CEF shows that petrol prices could increase between 80 cents for 93 unleaded and 90 cents for 95 unleaded. The figures could potentially rise to the R1 to R1.10 range if the data from recent days persists.
The diesel price outlook is also concerning with the CEF data showing that prices could rise by R2.85 for 500ppm and R3.05 for 50ppm in September.
Illuminating paraffin appears to increase by R2.23.
Debt Rescue CEO Neil Roets said that rising diesel prices is particularly concerning because of its widespread impact across the economy.
"From a consumer debt perspective, a sharp diesel increase is particularly concerning because diesel is embedded in the cost of transporting food, operating public transport, supporting agriculture and delivering essential goods.
"Even consumers who do not drive diesel vehicles may therefore feel the impact through grocery prices, transport fares, delivery charges and everyday services."
"A higher petrol bill may not seem catastrophic on its own. A slightly higher bond repayment may appear manageable. However, consumers do not experience these costs separately. They experience them collectively," Roets said.
For many South Africans, the compounded effect of the resultant electricity, water, and property rate hikes will further erode their financial resilience and deepen their reliance on credit.
Dr Lerato Ntuli, Economist, 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. On a monthly basis, headline inflation moderated to 0.2%, slowing from 0.7%, while core inflation slowed to 0.5% from 0.7%.
"Fuel price dynamics have subsequently turned less favourable, with Diesel 0.05% increasing by a further 6% in August. Looking ahead, the CEF's latest projections point to potential fuel price increases of around R2.90 a litre for diesel and 88 cents a litre for petrol in September, suggesting that fuel prices could place renewed upward pressure on headline inflation in the coming months," Ntuli said.
She added that domestic food inflation remained subdued, slowing to 0.9% year-on-year from 1.6% previously and declining 0.2% month-on-month.
"This stands in contrast to global trends, with the Food and Agriculture Organization (FAO) Food Price Index (FFPI) rising by 0.6% to 131.1 points in July. SA continues to benefit from favourable base effects, improved agricultural conditions, and adequate food supply, which have helped cushion domestic consumers from the full impact of rising global food prices and ongoing geopolitical disruptions," Ntuli said.
Ntuli said that the rand has provided some support, strengthening to around R16.20/US$1 from R16.40/US$1 at the end of July.
"The currency continues to benefit from elevated gold and platinum prices, which have improved SA’s terms of trade. Nevertheless, the recent recovery in Brent crude oil prices presents a renewed risk to the inflation outlook, particularly given SA’s reliance on imported fuel and the ongoing conflict in the Middle East," she added.
The South African Reserve Bank’s (SARB) Monetary Policy Committee (MPC) elected to leave the repo rate unchanged at 7.00% at its July meeting.
Ntuli said that Sarb's MPC elected to keep the repurchase rate unchanged at 7% at its July meeting, while the moderation in headline inflation is encouraging, persistent underlying inflation and renewed pressure from energy prices are likely to keep the Sarb cautious.
"Brent crude has risen above US$90/bbl, compared with around US$70/bbl at the beginning of July, highlighting the sensitivity of the domestic inflation outlook to developments in global energy markets. While headline inflation has moderated, upside risks from oil prices, fuel costs, and the inflation outlook are likely to keep the Sarb cautious. We therefore expect the Sarb to maintain a relatively restrictive policy stance, with one additional 25-basis point rate increase likely during 2026," Ntuli said.
ashley.lechman@nationalmg.co.za