South Africa’s consumer inflation decelerated as expected in July, with the consumer price index (CPI) rising 4.6 percent from a year earlier, said Statistic SA on Wednesday.

A 4.6-percent CPI is a figure last seen in 2015. The data shows that July’s fuel price drop helped slow down inflation.

That was slower than June’s 5.1 percent increase, and better than the expectations of 4.7 to 4.8 percent, and it was within the Reserve Bank’s 3 to 6 percent target.

“We expected inflation to slow to 4.7 percent, because of falling fuel prices and slowing food inflation,” Investec’s Kamilla Kaplan told Xinhua on Wednesday.

Fuel prices fell 3.6 percent compared with a year earlier, and it fell 4.8 percent in July from June, while energy inflation was 2.1 percent.

“Although we expect further moderation in the next few months, the picture of the food basket is mixed. Most food products have decelerated, with the exception of meat which is proving stickier than expected, recording 14.4 percent year-on-year in July, which is the highest level since December 2011. This is on the back of an outbreak of avian influenza and cattle restocking process after the 2015-16 drought,” Wandile Sihlobo, an economist with Agbiz said.

“On a positive note, grain, dairy and vegetable related food products inflation decelerated due to a recovery in agricultural production,” Sihlobo added.

He expected the 2017 summer grain and oilseeds production are set to reach 18.44 million tonnes, which is a 96-percent annual increase. In addition, there was also a rebound in vegetable production. This might continue to counter the increases in meat inflation and essentially keep food inflation at relatively lower levels.

Statistics SA’s data showed on Wednesday that food prices rose 6.8 percent from a year earlier in July, after a 7-percent increase in June.

In July, the Reserve Bank cut interest rates for the first time in five years when its monetary policy committee met, after an improved inflation outlook.

South Africa had been hard hit by drought but has eased in many parts of the country. the data showed that the food prices have been falling steadily.

Both these factors have moved in the wrong direction in recent weeks, and prices are expected to rise again in August, by roughly the same amount as of July’s reduction. Enditem

Source: Xinhua/