Food inflation rose to its highest level in 18 months, helping to push headline inflation above the Reserve Bank’s 3% target, according to the latest data from Stats SA.
Food inflation accelerated to 5.5% in July from 4.7% in June, while headline inflation climbed to 3.5%, the highest annual rate since July 2024.
“The benign inflation outlook and moderate domestic demand should provide an opportunity for further rate cuts. However, we believe that the monetary policy committee’s preference for a 3% target point will tilt the decision in favour of flat rates at the September meeting,” Nedbank economists said.
Food and nonalcoholic beverages exerted the most upward pressure, followed by housing and utilities inflation.
Within the food category, meat prices surged 10.5%, vegetables 14.6%, and fruit and nuts 9.5%, reflecting local supply constraints and lingering base effects.
“Food prices are impacted by global agricultural prices, which are priced in US dollars, and so are affected by the exchange rate, with the rand not having seen any notable gains last month or this month to date,” said Investec chief economist Annabel Bishop. “The rand has been heavily driven by US dollar movements this year.”
According to Stanlib chief economist Kevin Lings, the July increase follows a similar increase in June as well as large increases in May and April.
Agbiz chief economist Wandile Sihlobo said that while increases in meat and vegetable prices underpinned the latest reading, “the major drivers of these particular products are temporary”.
“Thus, we have maintained our view of potentially moderating food price inflation in the coming months.”
He noted the increase in meat price inflation was due to two factors, which have now eased. First, there was the outbreak of avian influenza in Brazil, which led to SA temporarily restricting imports of poultry products from that country, causing panic in the market. “However, the restrictions have now been lifted and imports are slowly recovering.”
Second, SA experienced an outbreak of foot-and-mouth disease, “which led to concerns about red meat supplies and some panic buying, thus temporarily pushing up prices”.
Sihlobo said: “The slaughtering has now resumed in the major feedlots, and we continue to believe we may see easing in red meat prices, which should be reflected in the inflation figures of the coming months.”
He explained that when there were outbreaks of disease, SA was temporarily restricted from various export markets, which over time increased the supply of red meat into the local market.
“About vegetables, the price increases are primarily because of the excessive rain’s impact on products, as we have seen volumes of certain products down somewhat in various fresh produce markets in the past couple of months. But the recent data [shows] an improvement.”
The July print, which fell in the middle of the range of forecasts by economists Business Day spoke to, may reinforce the Bank’s cautious stance on interest rates in September.
Core inflation (excluding food, nonalcoholic beverages, fuel and energy prices) sits at 3% year on year, up from 2.9% in June.
The consumer price index (CPI) increased by 0.9% month on month. The sharp increase was driven by annual municipal tariff adjustments, which saw electricity and other fuels jump by 8.6% month on month and water-related services increase 6.5%.
Transport inflation remained a moderating force. While fuel prices rose 2.6% month on month, they were still 5.5% lower than a year ago, slightly offsetting the effect of the steep gains in other categories.
Bishop expects consumer inflation to keep rising over the remainder of this year, “with the impact of sharply falling CPI inflation in the second half of last year now coming through on the year-on-year calculation for the second half of this year, boosting the outcome”.
Update: August 20 2025
This story has been updated with comments.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.