Inflation Slows in August as Costs Ease

Annual consumer price inflation slowed to 3.3 per cent in August, down from 3.5 per cent in July, Statistics South Africa reported on Wednesday.

Patrick Kelly, Chief Director of Price Statistics, said softer food and fuel costs helped ease the overall inflation rate. “Annual inflation for food and non-alcoholic beverages slowed to 5.2 per cent, down from 5.7 per cent the previous month. Within this, several categories eased, including cereals, seafood, dairy products, fruit, nuts and vegetables,” he explained.

Cereal products showed the biggest improvement, dropping from 2.1 per cent in July to 1.5 per cent in August. Kelly noted that some staples, such as hot cereals, white rice, bread and pasta, are cheaper now than a year ago. However, maize meal and samp remain expensive, while beef products continue to register high annual increases, although at their slowest pace since April.

Fuel prices also dropped by 5.7 per cent year-on-year, further supporting the slowdown. Inflation remains within the Reserve Bank’s target range of 3 to 6 per cent.

Dr Elna Moolman, Head of South Africa Macroeconomic Research at Standard Bank Group, said the outcome was slightly better than expected. She noted that the current benign inflation environment could, at some point, create room for the Reserve Bank to ease interest rates. However, she cautioned that the timing of such relief was uncertain, particularly as the Bank is now focused on anchoring inflation closer to the lower end rather than the midpoint of its 3 to 6 per cent target range.

The Reserve Bank’s Monetary Policy Committee is expected to announce the repo rate on Thursday.