SA Inflation Eases, But Higher Rates Ahead

South Africa's annual inflation rate eased to 4.3% in July, down from 5.0% in June, according to Statistics South Africa.

The decrease is largely due to a roughly R2 per liter petrol price cut on July 1st, which led to lower fuel and transportation costs.

However, core inflation, which excludes food and energy items, rose to 4.2% in July from 4.1% in June, indicating that underlying price pressures remain high.

The South African Reserve Bank (SARB) is likely to raise interest rates by 25 basis points to 7.25% before the end of 2026 due to inflation remaining above its 3% target.

The SARB will consider both domestic and external factors, including the uncertainty surrounding Iran's oil prices and the US Federal Reserve's plans to anchor US inflation towards its 2% target.