Inflation has cooled to its lowest level in 3 years, which paves the way for an interest rate cut in September.

Annual consumer price inflation dropped from 5.1% in June to 4.6% in July – the lowest level since July 2021.

Contributing to the lower inflation are transport and food costs that have both decreased further.

READ: Inflation cools further, food inflation lowest in 45 months

The annual rate for food and Non-Alcoholic Beverages was 4,5% in July, down from 4,6% in June.

As recently as November 2023, food inflation was at 9%, and is currently at its lowest since September 2020.

While overall food inflation has slowed, bread and cereals is showing upward momentum. This category recorded an annual increase of 5,6% in July, up from June’s 5,2%.

Products with the largest annual increases in July include rice (up 21,3%), pizza or pies (up 11,6%) and samp (up 6,9%). Maize meal prices rose on average by 5,1%.

On a positive note, bread flour, cake flour, pasta and macaroni are cheaper than a year ago.

Meat is the most heavily weighed food group in the inflation basket, taking up just over a third of household spending on food. The price index for meat recorded a monthly decline of 0,4% and an annual rise of 1,0%.

Hot beverages continue to witness high inflation rates. The price index for the category increased sharply by 17,6% in the 12 months to July, up from 16,5% recorded in June.

Large annual price increases were recorded for instant coffee (up 21,8%), drinking chocolate (up 17,7%), black tea (up 15,7%), ground coffee and coffee beans (up 14,6%) and rooibos tea (up 11,1%).

Cappuccino sachets recorded the lowest price increase in this category, rising by 7,6% over the same period.

Except for public transport, most categories in the transport group witnessed lower annual rates. This includes new and used vehicles, running costs and fuel. As a result, annual transport inflation softened to 4,2% in July from 5,5% in June.