JOHANNESBURG, Aug 19 – South Africa’s annual inflation eased more than expected in July, strengthening the case for the central bank to leave interest rates unchanged as policymakers assess the economic fallout from the Iran war.
Consumer prices increased 4.3% year-on-year in July, down from 5% in June, according to Statistics South Africa. The reading was also below the 4.5% median forecast from a Bloomberg survey of 18 economists.
On a monthly basis, consumer inflation increased 0.2% in July, a significant slowdown from the 0.7% increase recorded in June.
The latest data provide some relief for policymakers after inflation accelerated sharply in June. The moderation brings headline inflation closer to the South African Reserve Bank’s target range and could give the central bank greater room to assess the durability of price pressures before making further changes to borrowing costs.
The inflation trajectory is particularly important as policymakers assess the effects of the conflict involving Iran and its implications for global energy markets. Movements in oil prices can feed through to transport, production and household costs, potentially complicating the central bank’s assessment of the underlying inflation outlook.
The July slowdown therefore provides a more favourable backdrop for maintaining the current policy stance, although future decisions will depend on whether inflation continues to moderate and how external energy-price risks evolve.
