Following very favourable inflation figures, economists expect the South African Reserve Bank is likely to leave its Repo Rate unchanged this year before kicking off a cutting cycle in early 2024.

Annual consumer inflation slumped to 4,7% in July, which is the lowest in 2 years. In June, inflation was also down on the previous month, at 5,4%.

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Statistics South Africa says it was especially lower transport inflation that helped push down overall inflation.

In 2021 and 2022, overall inflation was mainly pushed higher by transport.

Headline consumer inflation hit a 13-year high of 7,8% in July 2022, with transport contributing 44% (3,4 percentage points) to the headline rate.

Fuel prices were largely to blame. In July 2021 the price of inland 95-octane petrol was R17,39 per litre, increasing sharply to a record high of R26,74 per litre in July 2022.

Such was the impact of fuel that South Africa’s inflation rate would have been 5,5% instead of 7,8% in July 2022 if fuel prices were stable, according to Stats SA’s analytical series.

After peaking in July 2022, fuel prices began to ease. Inland 95-octane petrol receded to R22,46 per litre in July 2023.

For a vehicle with a 50-litre fuel capacity, this translates to a saving of R214.

Food inflation has also eased, but not as quickly as transport.

The annual rate for the food & non-alcoholic beverages (NAB) category was 9,9% in July, lower than June’s print of 11,0%.

Annual inflation for bread & cereals slowed to 13,1% from 15,5% in June. Maize meal, an important staple, was cheaper in July compared with June, with prices falling on average by 0,7%.

Annual meat inflation declined for a fifth consecutive month, easing to 5,1%.

Resisting the downward trend is dairy, beverages, sugar, sweets & desserts.

The annual rate for milk, eggs & cheese increased to 14,4% from 14,1% in June. Cheese prices are rising sharply, with large annual increases recorded for cheese spread (up 19,5%), cheddar cheese (up 19,0%) and Gouda cheese (up 16,6%).

Annual inflation for hot beverages steamed to 9,0% in July from 8,7% in June, with the rate for instant coffee increasing from 10,3% to 11,5%.

White sugar is on average 20,8% and brown sugar 22,8% more expensive than a year ago. The sugar, sweets & desserts category recorded an annual inflation rate of 18,7%, up from 16,4% in June. This is the highest reading for this category since May 2017.

Inflation for alcoholic beverages is also picking up. The annual rate for the category increased to 7,8% in July from 6,9% in June. Annual wine inflation edged higher to 9,8% and beer saw its rate bubble up to 7,4%.

Increases in electricity, water and property rates are also weighing on inflation. On average, households are paying 14,5% more for electricity. Water tariffs increased by 9,6% and property rates by 2,9%.

The graph below illustrates the largest consumer price increases over the last year, and the last month.

Onions are a staggering 55,2% more expensive than a year ago, while on a monthly basis the cost of electricity is hitting consumer’s pockets hard.