According to data from Statistics South Africa (Stats SA), the annual inflation rate in South Africa sharply decreased to 4.3% in July, compared to 5.0% in June. This marked the first decline in the overall inflation rate in five months. The main factors contributing to this slowdown were the decrease in food sector inflation, a reduction in municipal tariff increases, and falling fuel prices.
Food inflation fell to a 16-year low
One of the key drivers of the decline was food inflation. Inflation for food and non-alcoholic beverages was only 0.9% in July, the lowest figure in over 16 years. Stats SA noted that such a low level was last recorded in June 2010, when it stood at 0.7%, during the FIFA World Cup hosted by South Africa.
The slowdown was caused by falling prices for cereals and meat. Cereal prices decreased by 2.0% year-on-year in July, compared to a 1.5% drop in June. Some individual items also became cheaper: the price of semolina fell by 3.1%, while the price of pasta and white bread dropped by 0.7% and 0.6%, respectively.
Meat inflation slowed significantly
Inflation in the meat segment also slowed considerably. The annual rate dropped to 1.5% in July, down from 5.1% in June. Some types of unprocessed beef showed price decreases compared to the previous year, including stewing beef (-7.9%), beef steaks (-6.1%), and ground beef (-5.8%). However, some processed meats increased in price, such as ham (+11.8%), meatballs (+7.8%), Russian sausages (+7.7%), and sausages (+6.2%).
Not all food prices decreased
Despite the overall slowdown in food inflation, some categories showed higher year-on-year growth in July. These categories include fruits and nuts, fish and other seafood, vegetables, oils and fats, cold drinks, as well as milk, other dairy products, and eggs. Inflation on oils and fats rose to 2.8% in July compared to 2.3% in June.
Electricity cost increases were smaller
Municipal tariffs also eased in July. The increase in electricity tariffs was 8.1%, which is lower than the 10.4% growth in 2025. The more modest increase helped reduce pressure on overall inflation.
Lower fuel prices brought relief
Inflation in the transport sector also sharply slowed in July. The annual rate of transport inflation dropped to 8.9% from 12.7% in June, mainly due to cheaper fuel. Between June and July, gasoline prices fell by 7.1%, and diesel fuel prices fell by 11.7%. This led to a decrease in annual fuel inflation to 20.6% in July compared to 34.3% in June. Nevertheless, despite the monthly decrease, fuel remained more expensive than a year ago: gasoline cost 19.3% more, and diesel fuel cost 28.8% more than in July 2025.
What caused the July inflation drop?
Simply put, the fall in inflation was largely a result of cheaper food, lower fuel prices, and smaller increases in municipal tariffs. Food and non-alcoholic beverage inflation reached its lowest level in over 16 years, and the sharp decline in inflation in the transport and fuel sectors also contributed to the overall decrease in the inflation rate.
