Inflation dips below 5% in July for the first time in 3 years

The inflation rate has dipped below 5% in July, the lowest in three years, after holding steady for ten months in the 5 to 6% range, while annual consumer price inflation slowed to 4.6% in July from 5.1% in June.

The last time inflation was this low was in 2021, when the rate was also 4.6%. The decrease of 0.5% was thanks to lower annual rates for several product groups, most notably food and non-alcoholic beverages, transport and housing and utilities.

According to Statistics SA that released the latest inflation data this morning, The monthly increase in the consumer price index (CPI) was 0.4%, higher than the 0.1% rise recorded between May and June.

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Food inflation decreases further

The annual rate for food and non-alcoholic beverages was 4.5% in July, down from 4,6% in June, after registering a slowing inflation trend since its most recent high of 9.0% in November 2023. It is now at its lowest since September 2020, when it was 3.8%.

However, while overall food inflation slowed, bread and cereals showed upward momentum. The category recorded an annual increase of 5.6% in July, compared to 5.2% in June. Prices that increased the most in July were rice (up 21.3%), pizza or pies (up 11.6%) and samp (up 6.9%).  Maize meal prices increased on average by 5.1%.

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

Statistics SA points out that 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 increase of 1.0%.

Inflation kept plaguing hot beverages, with the price index for the category increasing 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%). The lowest increase was for Cappuccino sachets, where the price increased by 7.6%.

These graphs show food and beverage products that recorded the most significant annual and monthly price increases in July.

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Fuel prices also decreased for a second consecutive month

Besides public transport, most categories in the transport group witnessed lower annual rates. This includes new and used vehicles, running costs and fuel and as a result, annual transport inflation softened to 4.2% in July from 5.5% in June.

Fuel prices decreased for a second straight month, declining by 3.6% in July after a 4.6% decrease in June. Inland 95-octane petrol was 99c cheaper, falling from R24.25 in June to R23.26 in July. The average price for diesel declined by 41c over the same period, from R23.76 to R23.35.

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New data for electricity, water and property rates

Statistics SA surveys electricity, water and property rates across 39 municipalities, totalling 117 prices. The bulk of these were captured in July, with 10 prices, mainly from smaller municipalities, due to be surveyed in August.

Most municipalities implement tariff increases in July. Overall, the housing and utilities index increased by 2.6% between June and July, leading to an annual increase of 5.3% which contributed 1.3 percentage points to the overall inflation rate.

Tariff hikes were lower in 2024, as electricity tariffs increased by 12.1% (compared to 15.3% in 2023), water tariffs by 7.5% (compared to 9.6% in 2023) and property rates by 10.7% (compared to 8.4% in 2023).

“An exploration of tariffs over time shows electricity prices increased the fastest over the last 15 years. Electricity tariffs recorded an average growth rate of 10.5% per year from 2009 to 2024, outpacing water tariffs that increased by an average of 10.2% per year and property rates that increased by an average of 6.8% per year.”

According to Statistics SA, water tariffs increased the most over the past 15 years, increasing by an average of 9.9% per year. Electricity tariffs increased by an average of 9.5% per year and property rates by an average of 6.6%.

A five-year analysis of the data that Statistics SA conducted, from 2019 to 2024, shows electricity tariffs outpacing water and property rates, growing by an average of 11.2% per year.