The local economic calendar is expected to quieten this week, with July’s consumer price index (CPI) the main domestic release.
Inflation is poised to edge higher in July, driven by fuel, food and municipal tariffs — the start of an upward trend that is expected to continue through the second half of 2025.
Bureau for Economic Research (BER) economist Lisette IJssel de Schepper expects a sharp jump, from 3% year on year to 3.7% in July. “This contributes to our expectation of inflation drifting closer to 4% over the near term and even above 4.5% around year end. Rising inflation through the rest of 2025 adds to the challenge for the [Reserve Bank] to lock in expectations at a lower inflation level,” she said.
Independent economist Elize Kruger expects the headline to increase to 3.6%, based on a monthly increase of 0.9%. She also forecasts core inflation to increase to 3.1%.
Kruger noted that July is a high survey month. “Other quarterly surveys that will feed into the CPI outcome in July include cost changes for satellite TV, gym fees, funeral expenses, clinic services, as well as building and household content insurance [biannual survey].”
Investec economist Lara Hodes and Old Mutual chief economist Johann Els project CPI to have increased to 3.2% and 3.4%, respectively.
“On food prices, there is still pressure on the heavily weighted meat category in the aftermath of the outbreak of foot-and-mouth disease among cattle, though increased slaughtering at abattoirs during July should start to alleviate the pressure recently experienced on meat prices,” Kruger said, adding that seasonal downwards pressure on fruit and vegetable prices in July should also partially offset the impact.
Hodes noted that the restriction on imports from Brazil, imposed due to avian flu, had been lifted.
July inflation, however, will reflect the first increase in fuel after four consecutive months of decline. “The impact on the inflation number will also be influenced by a low base of calculation, as fuel prices dropped notably in July 2024,” Kruger said.
Petrol and diesel prices increased by 54c/l and 83c/l, respectively in July this year.
According to Kruger, July is also known as the administered price month “as the annual municipal tariff increases are typically not reflective of a competitive environment, but reflect the current realities in local authorities, which in many cases include inefficiencies, lack of maintenance in general, cross-subsidisation and corruption activities eroding available capital for service delivery”.
She said: “Municipal tariff increases are typically much higher than average consumer inflation and as such will exert upward pressure on consumer inflation in July.”
The Reserve Bank’s next monetary policy committee meeting is in September.
Els does not expect another rate cut at that time. “I expect that this is the price we must pay for the new, lower inflation target of 3%,” he said. But a cut is not impossible. “I see some analysts are expecting a rate cut in September. It’s not my base case, but the Bank might want to give us some benefit from this lower target, to ‘sell’ [it] to us.”
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