South Africa’s inflation rate dropped significantly in July, reaching its lowest point in over three years and coming close to the central bank’s target range.
The headline consumer inflation rate fell to 4.6% year-on-year, down from 5.1% in June, according to data released by the statistics agency on Wednesday. This was lower than the 4.9% that analysts had anticipated.
The South African Reserve Bank (SARB) aims to keep inflation around 4.5%, the midpoint of its 3% to 6% target range.
However, inflation had remained above this level since mid-2021. With the latest figures, many economists now expect the SARB to cut its main policy rate by 25 basis points in September, a move that seems increasingly likely.
Independent economist Elize Kruger noted, “The SARB has definitely run out of excuses to not cut interest rates and might even consider a larger reduction.”
On a month-on-month basis, inflation rose to 0.4% in July, compared to 0.1% in June.
