Food inflation crashes to 16-year low as CPI cools to 4.3 percent

South Africa's annual inflation rate dropped significantly to 4.3% in July, the lowest level in 16 years, according to Statistics South Africa (Stats SA). This decline follows an even lower June rate of 5.0%. The main driver behind this decrease was lower food inflation, accompanied by reduced municipal tariff hikes and falling fuel prices.

Food and non-alcoholic beverage inflation reached a record low of 0.9% in July, marking the smallest figure in over 16 years since June 2010, when it was at 0.7%. The substantial decline in food prices was primarily due to cereal products and meat. Cereal prices fell by 2.0% year-on-year, while meat prices decreased notably, with annual inflation dropping from 5.1% in June to 1.5% in July.

However, processed meat products saw some price increases, including corned meat, meat patties, Russians, and sausages. Despite these positive trends, certain food categories experienced higher annual inflation rates, such as fruits, nuts, fish, seafood, vegetables, oils and fats, cold beverages, and milk, dairy products, and eggs.

Oils and fats inflation rose to 2.8% in July from 2.3% in June. Municipal tariff increases softened in July, with electricity tariffs increasing by 8.1% compared to 10.4% in the previous year. Meanwhile, transport inflation moderated to 8.9% in July from 12.7% in June, largely attributed to lower fuel prices. Petrol prices dropped by 7.1%, and diesel by 11.7% between June and July, reducing the annual fuel price rate to 20.6% from 34.3% in June.