South Africa: Consumer inflation rate eases in July for first time in five months

South Africa's annual inflation rate eased in July for the first time in five months, helped partly by a steep drop in transportation costs.

Statistics South Africa said on Wednesday that it had slowed from a two-year high of 5% in June to 4.3% in July, below the 4.5% predicted by economists.

The agency said the slowdown could be attributed to three main factors: softer inflation for food and non-alcoholic beverages, slower municipal tariff increases, and a ​decline in fuel prices.

Annual fuel prices slowed to 20.6% from 34.3%, reflecting lower petrol costs as crude oil pulled back from highs at the start of the Middle East conflict_,_ but remain volatile.

It said the easing of food and non-alcoholic beverages costs was driven by lower cereal prices and slower meat inflation.

Price growth was also moderated by smaller municipal tariff increases, notably for electricity, water, and refuse removal, which are implemented in July.

Inflation, however, remains above ​the central bank's 3% target.

Core inflation, which excludes food and energy for a clearer read on underlying price trends, accelerated slightly to 4.2% at an annual rate compared with 4.1% in June

The easing of inflation has hardened the argument for the central bank to keep interest rates on hold as it assesses the fallout from the Iran war.

It surprised investors and economists by keeping rates ⁠unchanged in ​July, saying its policy was restrictive ​enough to return inflation to its target within two years.